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People pass through a busy intersection in Tokyo on November 15, 2023.
Tokyo
CNN
—
Japan's economy unexpectedly contracted due to slumping domestic consumption, sending Japan into recession and losing its position as the world's third largest economy to Germany.
Gross domestic product (GDP) shrank at an annualized pace of 0.4% in the last three months of 2023, after contracting in the previous quarter, the Cabinet Office said on Thursday. A recession is usually defined as two consecutive quarters of economic contraction.
This data confirms that Japan's economy was the fourth largest in the world in US dollar terms last year, behind Germany.
Personal consumption, which accounts for half of the economy, fell 0.2% as Japanese consumers grappled with soaring prices for food, fuel and other goods.
Japan imports 94% of its basic energy needs and 63% of its food, so the weaker yen has contributed significantly to the rising cost of living, Neil Newman, a Tokyo-based strategist at Japan Macro, told CNN. Told.
“In particular, personal consumption is sluggish, [and] “Market expectations were flat,” he said. “Unfortunately, the situation will get even worse in January after the Sea of Japan earthquake. People stop spending when natural disasters occur.”
This is a developing story and will be updated.
