Germany replaces Japan as third largest economy in the world in 2023

Japan lost its symbolic title of third world economic power to Germany in 2023, notably under the effect of the fall of the yen, according to a first estimate of Japanese gross domestic product (GDP) published Thursday February 15.

Japan’s nominal GDP in 2023 amounted to some $4.2 trillion (around 3.9 trillion euros), compared to around $4.5 trillion (around 4.1 trillion euros) for Germany, of which nominal GDP was boosted by inflation, which remained high last year in the country.

A new trompe-l’oeil title for Berlin

But in real terms, that is to say without the bias of inflation, Japanese GDP accelerated last year (+1.9%, compared to 1% in 2022), while the German economy is It contracted by 0.3% according to official data published in January. 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 in an effort to beat inflation.

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, is perceived as a sham across the Rhine. Especially since India could overtake both Japan and Germany within a few years, still in nominal GDP denominated in dollars.

In Japan, local media have extensively commented on the country’s 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 the accelerated demographic decline of the archipelago and the chronic weakness of its productivity.