Japan Recession: The global economy hasn’t quite found its footing yet as we step into 2024. On one hand, major renowned companies are steadily expanding, while on the other hand, economic slowdown has widened its reach. After grappling with economic challenges last year, Germany, and now Britain, finds itself in the grip of a downturn, with Japan also feeling the strain. However, amidst this economic ebb, Germany has seen a silver lining, surpassing Japan to become the world’s third-largest economy, leaving Japan behind.

GDP Comparison between Japan and Germany

Germany, the largest economy in Europe, experienced a slight recession for a brief period last year, with its GDP contracting by 0.3% in 2023. Meanwhile, Japan saw an improvement with a 1.9% growth during the same period. Despite this growth, Germany has now surpassed Japan in terms of GDP size. According to statistics, Japan’s economy stands at $4.2 trillion, while Germany’s economy is valued at $4.5 trillion.

Top Five Economies in the World

Currently, the United States boasts the largest economy globally, nearing $27 trillion. Following closely is China, with an economy of around $17 trillion. Japan, traditionally the world’s third-largest economy, has now slipped to the fourth position, while Germany has made a leap to claim the third spot. India, with an economy of around $3.75 trillion, holds the fifth position.

Reasons for Japan Recession

Japan’s setback can largely be attributed to fluctuations in currency rates. Over the past two years, the yen has significantly depreciated, dropping by nearly 20% against the dollar. In 2023 alone, the yen witnessed a decline of around 7%. Despite registering a growth rate of around 2%, Japan’s GDP size in dollar terms has shrunk.

Economic Downturn in Japan and Britain

Japan faces potential losses due to its sluggish economy in the coming days. During the December quarter, Japan’s GDP contracted by 0.1%. After adjusting the estimates for the September quarter, a reduction of 0.8% was recorded. It’s evident that Japan is technically in a state of recession. Britain, too, has fallen prey to the economic downturn. Its GDP witnessed a decline of 0.1% in the September quarter and further dropped by 0.3% in the December quarter. Consistent negative growth in GDP over two consecutive quarters is indicative of a technical recession.

India to Challenge Japan and Germany

According to estimates from the International Monetary Fund (IMF), by 2026, India is expected to surpass Japan, and by 2027, Germany, securing a place among the top three economies in the world. Currently, India ranks fifth among the largest economies globally.

Based on Forbes figures, the United States remains the largest economy, followed by China, Germany, Japan, and India, respectively. While the U.S. leads with approximately $27.974 trillion, India holds the fifth position with approximately $4.112 trillion, making it one of the top economies globally.

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