According to data for the fourth quarter of 2023, released by the Japanese government on Thursday, the country’s nominal Gross National Product (GDP) shrank by 0.1% to 4.21 trillion dollars (3.9 trillion yen). euro). In Germany the nominal GDP reaches 4.46 trillion. euro. This means that Germany is once again the third largest economy in the world. The USA remains in first place, followed by China.

It has been almost 50 years since Japan overtook Germany and established itself as a leading economic power. In the 1990s the Japanese economy was more than twice the size of Germany’s. Since then, it has probably been shrinking. In addition, the yen’s exchange rate against the US dollar has fallen by 50% in recent years. In its World Economic Outlook report last November, the International Monetary Fund (IMF) predicted that Germany would overtake Japan.

However, the decline in GDP at the end of 2023 for the second consecutive quarter is an unpleasant surprise for the “Land of the Rising Sun”. Most analysts expected a positive sign and a growth rate of at least 1%. In addition, notes the German newspaper Frankfurter Allgemeine Zeitung (FAZ), “several companies such as Toyota and machinery equipment company Komatsu have announced record profits recently.”

“Thorn» inflation

On the other hand, private consumption, which traditionally accounts for half of Japan’s GDP, shrank by 0.2% in the fourth quarter of 2023. This is due to the continued rise in inflation that eats away at real incomes. According to the German public broadcaster (ARD) the restraint of Japanese consumers is particularly noticeable in the focus, as well as spending on clothing and footwear.

Recently, Bank of Japan (BOJ) chief Kazuo Ueda has repeatedly called on businesses to implement substantial wage increases to boost domestic demand. “The fact that Germany has overtaken us proves that structural reforms are needed in our country,” Economy Minister Yoshidaka Shido now states.

Simple illustration of her moment?

In Germany, however, no one is celebrating the “bronze medal” of the world economy. It is widely believed that this is due more to the weakening of the Japanese than to the strengthening of the German economy, which is still gasping on the edge of recession.

As Matias Krieger, an economist and analyst at the LBBW bank, points out to Reuters, “extremely negative demographic developments, structural problems and the weakness of the yen are the main causes” for the problems of the Japanese economy.

Speaking to ARD, Thomas Theobald, a researcher at the German Institute for Macroeconomic Policy (IMK), even claims that the third place of the German economy in international competition is due to current factors and is “exclusively related to fluctuations in exchange rates, so it is an illustration of the moment”.