Please ensure Javascript is enabled for purposes of website accessibility

US House Passes Stablecoin Legislation, Sending Bill to Trump

8 hours ago

Man Admits to Killing Missing Bass Lake Resident, Madera County Authorities Say

10 hours ago

Trump Diagnosed With Vein Condition Causing Leg Swelling, White House Says

10 hours ago

US Strikes Destroyed Only One of Three Iranian Nuclear Sites, NBC News Reports

13 hours ago
Recession Drops Japan to World's Fourth-Largest Economy, Weakens the UK
gvw_ap_news
By Associated Press
Published 1 year ago on
February 15, 2024

Share

Getting your Trinity Audio player ready...

Japan’s economy falls to fourth-largest globally behind Germany.

Japan’s GDP contracted at an annual rate of 0.4% in Q4 2023.

Britain reports its economy entered a technical recession in October-December.


TOKYO — Japan’s economy is now the world’s fourth-largest after it contracted in the last quarter of 2023 and fell behind Germany.

The government reported the economy shrank at an annual rate of 0.4% from October to December, according to Cabinet Office data on real GDP released Thursday, although it grew 1.9% for all of 2023. It contracted 2.9% in July-September. Two straight quarters of contraction are considered an indicator an economy is in a technical recession.

Japan’s economy was the second largest until 2010 when it was overtaken by China’s. Japan’s nominal GDP totaled $4.2 trillion last year, while Germany’s was $4.4 trillion, or $4.5 trillion, depending on the currency conversion.

Factors Behind the Economic Shift

A weaker Japanese yen was a key factor in the drop to fourth place because comparisons of nominal GDP are in dollar terms. But Japan’s relative weakness also reflects a decline in its population and lagging productivity and competitiveness, economists say.

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.

Japan was historically touted as “an economic miracle,” rising from the ashes of World War II to become the second-largest economy after the U.S. It kept that going through the 1970s and 1980s. But, for most of the past 30 years, the economy has grown only moderately at times, mainly remaining in the doldrums after the collapse of its financial bubble began in 1990.

Britain Goes Into Recession

Both the Japanese and German economies are powered by strong small and medium-sized businesses with solid productivity.

Like Japan in the 1960s-1980s, for most of this century, Germany roared ahead, dominating global markets for high-end products like luxury cars and industrial machinery, selling so much to the rest of the world that half its economy ran on exports.

But its economy, one of the world’s worst performing last year, also contracted in the last quarter, by 0.3%.

Britain’s likewise contracted late last year. Britain reported Thursday that its economy entered a technical recession in October-December, shrinking 0.3% from the previous quarter. The quarterly decline followed a 0.1% fall in the previous three-month period.

Future Outlook

As an island nation with relatively few foreign residents, Japan’s population has been shrinking and aging for years, while Germany’s has grown to nearly 85 million, as immigration helped to make up for a low birth rate.

The latest data reflect the realities of a weakening Japan and will likely result in Japan’s commanding a lesser presence in the world, said Tetsuji Okazaki, professor of economics at the University of Tokyo.

“Several years ago, Japan boasted a powerful auto sector, for instance. But with the advent of electric vehicles, even that advantage is shaken,” he said. Many factors have yet to play out, “But when looking ahead to the next couple of decades, the outlook for Japan is dim.”

The gap between developed countries and emerging nations is shrinking, with India likely to overtake Japan in nominal GDP in a few years.

The U.S. remains the world’s largest economy by far, with a GDP of $27.94 trillion in 2023, while China’s was $17.5 trillion. India’s is about $3.7 trillion but growing at a sizzling rate of about 7%.

Challenges and Solutions

Immigration is one option for solving Japan’s labor shortage problem, but the country has been relatively unaccepting of foreign labor, except for temporary stays, prompting criticism about discrimination and a lack of diversity.

Robotics, another option, are gradually being deployed but not to the extent they can fully make up for the lack of workers.

Another key factor behind Japan’s sluggish growth is stagnating wages that have left households reluctant to spend. At the same time, businesses have invested heavily in faster-growing economies overseas instead of in the aging and shrinking home market.

Private consumption fell for three straight quarters last year and “growth is set to remain sluggish this year as the household savings rate has turned negative,” Marcel Thieliant of Capital Economics said in a commentary. “Our forecast is that GDP growth will slow from 1.9% in 2023 to around 0.5% this year.”

 

RELATED TOPICS:

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

UP NEXT

Former Los Banos Teacher Indicted on Federal Child Exploitation Charges

Israel Demands UN Scrap Investigation Body for Palestinian Territories

6 hours ago

Trump Signs Executive Order Creating New Classification of Non-Career Federal Workers

7 hours ago

Stephen Colbert’s Late-Night Show on CBS to End in May 2026

LOS ANGELES – “The Late Show with Stephen Colbert” on CBS will end in May 2026 after the upcoming broadcast season, the ne...

5 hours ago

Stephen Colbert arrives for the Saturday Night Live 50: The Anniversary Special at 30 Rockefeller Plaza in New York City, U.S., February 16, 2025. (Reuters File)
5 hours ago

Stephen Colbert’s Late-Night Show on CBS to End in May 2026

The crest of the United States Department of Justice (DOJ) is seen at their headquarters in Washington, D.C., U.S., May 10, 2021. REUTERS/Andrew Kelly/File photo
6 hours ago

Former Los Banos Teacher Indicted on Federal Child Exploitation Charges

6 hours ago

C for Chaos? Ashjian Kicked Off Measure C Committee

Flares fired by Israel Defense Forces light the sky above Gaza, as seen from the Israeli side of the border, July 17, 2025. (Reuters/Amir Cohen)
6 hours ago

Israel Demands UN Scrap Investigation Body for Palestinian Territories

President Donald Trump speaks during a press conference in the Roosevelt Room at the White House in Washington, D.C., U.S., May 12, 2025. (Reuters File)
7 hours ago

Trump Signs Executive Order Creating New Classification of Non-Career Federal Workers

Federal Trade Commissioner Rebecca Slaughter testifies on the "Oversight of the Federal Trade Commission" before the U.S. Senate Consumer Protection, Product Safety, Insurance and Data Security Subcommittee in the Russell Senate Office Building in Washington, U.S., November 27, 2018. (Reuters File)
8 hours ago

Judge Rules Trump’s Firing of FTC Commissioner Was Illegal

FILE PHOTO: A view shows the dome of the U.S. Capitol, in Washington, D.C., U.S., July 3, 2025. REUTERS/Umit Bektas/File Photo
8 hours ago

US House Passes Stablecoin Legislation, Sending Bill to Trump

A view of the U.S. Department of Health and Human Services building, in Washington, D.C., U.S., March 27, 2025. (Reuters File)
8 hours ago

US Health Department Hands Over Medicaid Personal Data to ICE

Help continue the work that gets you the news that matters most.

Search

Send this to a friend