Germany overtakes Japan as world’s third largest economy
As Japan slumps into a technical recession, Germany has overtaken the country as the third-largest economy in the world. The two countries' economies currently share some significant similarities.
Germany becomes third largest economy in the world
With a weakened yen in Japan, on February 15 Germany’s economy became the third largest in the world. In nominal terms, figures which are not adjusted to inflation rates, the Japanese economy grew by 1,9 percent in 2023, but shrank by 3,3 percent and 0,4 percent in the last two quarters. This amounted to a GDP of 4,2 trillion US dollars, just shy of the 4,5 trillion in Germany.
Declared when a country sees two consecutive negative quarters, Germany also entered a technical recession in May 2023 and the two country’s economies have several things in common: an ageing population, a lack of resources and a dependence on exporting goods.
In recent years the Japanese government has encouraged people to have more children and introduced a new residence permit to entice skilled migrants, the Specified Skilled Worker (SSW) residence. But like Germany, the country is saddled with a record-high worker shortage which is only expected to get worse.
India soon expected to eclipse Germany and Japan
But behind the United States and China, it isn’t expected to be long until both Germany and Japan are eclipsed for third place.
With a population of 1,4 billion people under the age of 35, India is expected to become the third largest economy in the world in the 2020s.
In the coming years, attitudes towards GDP may also have to change as the climate crisis further shapes economics. For decades, GDP has been used to measure economic development without accounting for how an unending race for GDP growth promotes environmental destruction.