Germany has wrested from Japan the symbolic title of the third largest economic power, according to preliminary data on Japanese GDP published today, cited by AFP and BTA. The USA and China are in first and second place.
Japan’s nominal GDP in 2023 was $4.21 trillion, compared to $4.46 trillion for Germany, whose nominal GDP was boosted by domestic inflation last year. But in real terms, ie. excluding the impact of inflation, Japan’s GDP accelerated last year (+1.9 percent from 1 percent in 2022), while Germany’s economy contracted by 0.3 percent, according to official data released in January.
In the final quarter of last year, Japan’s real GDP fell by 0.1 percent compared to the previous quarter, when the indicator also weakened by 0.4 percent on a quarterly basis, according to preliminary data from the Japanese government.
On an annual basis – compared to the same quarter of 2022, the economic output of the country has also decreased – by 0.4 percent, after a drop of 2.9 percent in the previous, third quarter. Thus, the Japanese economy has entered a technical recession during the period October – December 2023, registering a second consecutive quarter of decline, adds Kyodo. The shift in positions mainly reflects the yen’s sharp decline against the dollar, which has collapsed by almost a fifth in 2022-2023 against the US currency, including about 7% last year. That’s partly because the Bank of Japan has maintained negative interest rates, unlike other major central banks that have raised borrowing costs to combat rising inflation.
As an exporter, Germany is suffering from weak foreign demand, energy costs for its large manufacturing sector and interest rates raised by the European Central Bank (ECB) in an attempt to tackle inflation. The deteriorating economic situation in Germany means that its new title of third world economic power, promised to it since October last year by the forecasts of the International Monetary Fund (IMF), is unstable, notes AFP.
LACK OF OPTIMISM
German Vice-Chancellor Robert Habeck, who is also Minister of Economy, defined the state of Germany’s economy as “extremely bad”, reported DPA and BTA.
Habeck’s statement comes amid the decision of the cabinet in Berlin to lower to 0.2 percent its forecast for the country’s economic growth this year.
In its autumn forecast, the German government announced that it expects the country’s economy to grow by 1.3 percent in 2024. Last year, Germany fell into recession, DPA said.
“We cannot continue in this way,” Habek pointed out today.
He emphasized the consequences of the decision of the country’s constitutional court, which in November last year prohibited the use of the remaining funds from a fund originally created to provide financial support to businesses and households affected by the restrictions imposed during the COVID-19 pandemic. .
The court decision “creates a hole” in the amount of 60 billion euros in the budget of the Federal Republic, states DPA.
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2024-02-16 17:35:40
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