The Japanese government announced official figures on February 15 showing that the country's nominal gross domestic product (GDP) in 2023 was 591.5 trillion yen, equivalent to 4.2 trillion USD, based on last year's average exchange rate (up 1.9%), according to NHK.
High-rise buildings in Tokyo
With that figure, Japan has been overtaken by Germany as the world's third largest economy , with Berlin's preliminary GDP last year being nearly $4,500 billion. Germany's population is only about two-thirds of Japan's.
The change in position is due more to the sharp fall in the value of the Japanese yen against the dollar than to the German economy outperforming Japan, economists say. The yen is set to lose nearly a fifth of its value against the dollar in 2022 and 2023, in part because the Bank of Japan has kept interest rates negative, in contrast to other major central banks.
Both economies are heavily dependent on exports and have problems, but Japan is suffering more than Germany from a shortage of workers due to a shrinking population.
Germany surpasses Japan to become the world's third largest economy
"The overtaking in dollar terms is largely due to the recent depreciation of the yen. Japan's real GDP has actually exceeded Germany's since 2019," economist Brian Coulton of credit rating agency Fitch Ratings told AFP.
Japan has been the world’s second-largest economy since 1968 and was expected to rise to the top spot. However, it was overtaken by China in 2010 and remained in third place until 2022.
Since Japan's economic bubble burst in the early 1990s, slow growth and persistent deflation have hampered consumer spending and business investment.
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