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Japan slips into recession allowing Germany to overtake as world's third largest economy

·1 min

Japan’s economy unexpectedly contracted due to weak domestic consumption, putting the country in recession and causing it to slip from its position as the world’s third largest economy to Germany. Gross domestic product shrank at an annualized pace of 0.4% in the last quarter of 2023, after already contracting in the previous quarter. Private consumption, which contributes half of the economy, declined by 0.2% as Japanese consumers faced higher prices for food, fuel, and other goods. The weak yen further contributed to increased living costs as Japan imports the majority of its energy and food. The recent Sea of Japan earthquake is expected to exacerbate the situation by discouraging spending.