TOKYO (AP) — Japan will fall behind Germany's economy in 2023, falling to the world's fourth-largest economy, government statistics released Thursday showed.
The numbers are Japanese economy Analysts say Japan is gradually losing competitiveness and productivity as its population shrinks as its population ages and the birthrate declines.
With the growth of China's economy, Japan fell from the second largest economy after the United States to third in 2010. The International Monetary Fund had predicted that Japan would fall to fourth place.
Comparisons of national economies are based on nominal GDP, which does not reflect different national circumstances and is based on dollars. Last year, Japan's nominal GDP was $4.2 trillion, or approximately 591 trillion yen. Germany's announced last month was $4.4 trillion or $4.5 trillion, depending on currency conversion.
According to the Cabinet Office's real GDP data, Japan's economy contracted at an annual rate of 0.4%, or -0.1% compared to the previous quarter, in the latest October-December period. Real GDP in the same year grew by 1.9% compared to the previous year.
Real gross domestic product is a measure of the value of a country's products and services. The annual rate measures what would happen if the quarterly rate continued for one year.
Both Japan and Germany have built their economies through strong small and medium-sized enterprises with stable productivity. In contrast to Japan, Germany has built a solid economic foundation against the backdrop of a strong euro and inflation. A weak yen also has a negative effect on Japan.
Tetsuji Okazaki, a professor of economics at the University of Tokyo, said the latest data reflects the reality of a weakening Japan, and that Japan's presence in the world is likely to decline.
“A few years ago, for example, Japan boasted a strong automobile sector. But with the advent of electric cars, even that advantage has been shaken,” he said.
Mr. Okazaki said the gap between developed and emerging countries is narrowing, and it is certain that India will overtake Japan in terms of nominal GDP within a few years.
Immigration is one option to solve this country's labor shortage problem. However, Japan is relatively open to foreign workers except as temporary guests, prompting criticism of lack of diversity and discrimination.
Another option is robotics, which is becoming increasingly popular, but not enough to address the country's chronic labor shortages.
Historically, Japan has been hailed as an “economic miracle,'' growing from the ashes of World War II to become the second largest economic power after the United States, a status it maintained from the 1970s to the 1980s.
Entrepreneurs who built companies from humble beginnings, such as Honda Motor Co.'s Soichiro Honda and Panasonic's Konosuke Matsushita, exemplified the hard work behind Nippon Corporation.
Made in Japan products have gained a reputation for being cheap but of high quality, and some products have become coveted all over the world. Now those may be the good old days.
Okazaki said many factors are still unknown.
“But looking ahead to the next few decades, the outlook for Japan is bleak,” he said.
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Yuri Kageyama is in X: https://twitter.com/yurikageyama
