Germany becomes the third economic power in the world, ahead of Japan, a misleading title

Germany gets on the podium but it is a mixed victory

Germany becomes the third economic power in the world, ahead of Japan, a misleading title

Germany gets on the podium but it is a mixed victory. Japan lost its symbolic title of third economic power in the world to Germany in 2023, notably under the effect of the fall of the yen, according to preliminary data on Japanese gross domestic product (GDP) published on Thursday February 15.

Inflated by inflation, Germany’s nominal GDP rose to $4.5 trillion in 2023 compared to Japan’s $4.2 trillion. In real terms (adjusted for inflation and seasonal variations), however, the Japanese economy grew by 1.9% last year, compared to only 1% in 2022, while the German economy grew. , contracted by 0.3% according to official data released in January.

The deterioration of the economic situation in Germany means that its new title of third economic power in the world, which was promised to it since last October by the forecasts of the International Monetary Fund (IMF), is perceived as a sham across the Rhine. Especially since India could overtake both Japan and Germany within a few years.

In Japan, demographic decline and low productivity

An exporting powerhouse, Germany is suffering from weak external demand, energy costs for its large manufacturing sector and interest rates raised by the European Central Bank (ECB) in a bid to beat inflation.

In Japan, local media have extensively commented on the loss of its third economic ranking in the world, recalling that beyond the exceptional impact of the fall of the yen, powerful negative fundamental factors are at work, such as demographic decline. accelerated growth of the archipelago and the chronic weakness of its productivity.

“After ceding second place behind the United States to China in 2010, Japan is now also giving up third place,” lamented the major Japanese economic daily Nikkei in an editorial published last Saturday. “Japan has not made progress in increasing its own growth potential. This situation should be a wake-up call to accelerate economic reforms that have been neglected,” Nikkei added.

Like Germany, Japan is an industrial and exporting power, but this status has been losing momentum for a long time and its domestic consumption is currently undermined by inflation and the fall of the yen.

In the fourth quarter, Japanese GDP contracted again (− 0.1% over one quarter in real data adjusted for seasonal variations), a second decline in a row after a more marked decline over the period from July to September (− 0.8% according to a figure revised downwards on Thursday).