Japan slips to the world's fourth-largest economy, behind the US, China and now Germany

Japan has slipped to the world’s fourth-largest economy as government data released on January 15 showed it fell behind the size of Germany’s in 2023.

Japan has slipped to the world’s fourth-largest economy as government data released on January 15 showed it fell behind the size of Germany's in 2023.

The numbers highlight how the Japanese economy has gradually lost its competitiveness and productivity while the population shrinks as Japanese people age and have fewer children, analysts say.

Japan fell from the second-ranked economy behind the U.S. to the third-largest in 2010 as China's economy grew. The International Monetary Fund had forecast Japan’s fall to fourth.

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The comparisons among nations’ economies look at nominal GDP, which doesn’t reflect some different national conditions, and is in dollar terms. Japan’s nominal GDP totaled $4.2 trillion last year, or about 591 trillion yen. Germany’s, announced last month, was $4.4 trillion, or $4.5 trillion, depending on the currency conversion.

For the latest October-December quarter, the Japanese economy shrank at an annual rate of 0.4%, and minus 0.1% from the previous quarter, according to Cabinet Office data on real GDP. For the year, real GDP grew 1.9% from the previous year.

Real gross domestic product is a measure of the value of a nation’s products and services. The annual rate measures what would have happened if the quarterly rate lasted a year.