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Japan set to fall to world’s fourth-largest economy



Japan is poised to confirm its slip to the world’s fourth-largest economy last year, overtaken by Germany, and likely soon India, due to its weakening currency and aging demographics. Despite an expected return to 1.2% growth in Q4 after a summer contraction, Japan’s annual output in dollar terms fell behind Germany’s. The shift reflects broader challenges, including Japan’s demographic decline and reliance on exports and cars, similar to Germany’s economic issues. However, India’s booming population and economic reforms are set to propel it past both nations. Japan’s GDP has shrunk in dollar terms from USD6.3tr in 2012 to around USD4.2tr in 2023, largely due to the yen’s depreciation. Meanwhile, Japan and Germany face labour shortages, while India, with a younger population, is poised for sustained growth, potentially overtaking China with strategic investments in manufacturing and technology.

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