Japan Falls Into a Recession

(RepublicanDaily.org) – Japan is no longer the world’s third largest economy after the country entered a recession following contraction in its economy for two consecutive quarters.

The country lost its place to Germany after reporting a 0.4% shrinking in its gross domestic product (GDP) for the period covering October to December last year. For the quarter before that, the country reported that its economy contracted by 3.3% at an annualized pace. The shrinkage surprised economic analysts and observers, who actually projected Japan’s economy to expand by an annualized 1.4% quarter-on-quarter for the final three-month period of 2023. The International Monetary Fund (IMF), however, had earlier estimated that Germany was on the path to overtake Japan in terms of global economic size and growth.

However, the data is considered to be a “first reading,” and could still change in the near future. The BBC reported that according to an economist it spoke to, Neil Newman, Japan’s latest economic net worth stands at roughly $4.2 trillion, while Germany’s is at approximately $4.4 trillion. Another factor that could improve – or undermine – Japan’s economic ranking is the value of the country’s currency against the U.S. dollar. The yen is currently weak against the U.S. dollar.

Japan joins a number of other world powerhouses in reporting a recession in recent months. The United Kingdom is one of those countries, reporting a 0.3% contraction in its economy for the final quarter of last year, following a 0.1% reduction for the period covering July to September. While the recession is relatively mild, observers point out that along with a lift in inflation, the country will likely continue to experience economic weakness.

Another country seeing a shrinkage in its economy is China, considered to be the world’s second largest economy. The Asian giant is still struggling with the after effects of its zero-lockdown procedures, a problem it juggles with a sharp decline in its real estate market, as well as a loss of confidence among consumers and local industries who doubt that President Xi Jinping’s strongman policies can spur China’s economy to grow again.