Japan falls into period of economic decline

Japan’s economy has shrunk for two quarters in a row, so now it’s in a recession.

The country’s total economic output shrank more than predicted by 0. 4% in the last three months of 2023, compared to the previous year.

It happened after the economy got smaller by 3. 3% in the last three months.

According to Japan’s Cabinet Office, the country is no longer the world’s third-largest economy. Germany has taken over that position.

Economists thought the new information would show that Japan’s economy grew by more than 1% in the last three months of last year.

The most recent numbers show how much Japan’s economy has grown recently. These numbers might change later.

A technical recession is when the economy shrinks for two quarters in a row.

In October, the IMF said that Germany is expected to become the world’s third-biggest economy when measured in US dollars, surpassing Japan.

The IMF will only say which country is doing better once both countries have shared their final economic growth numbers. It started sharing information about different economies in 1980.

Economist Neil Newman said on the media that new numbers show Japan’s economy was valued at about $4. 2 trillion in 2023, while Germany’s was valued at $4. 4 trillion

This happened because the Japanese money was not very strong compared to the dollar. If the yen gets stronger again, Japan could become the third biggest economy again, Mr.

At a meeting for the media in Tokyo, the IMF’s second in command, Gita Gopinath, said an important reason Japan might drop in the rankings is because the yen dropped 9% against the US dollar last year.

However, the yen is not very strong, which has made the stock prices of big Japanese companies go up. This is because it makes it cheaper for other countries to buy Japanese exports like cars.

This week, Tokyo’s main stock index, the Nikkei 225, reached 38,000 for the first time since 1990, when a drop in property prices caused an economic crisis. The Nikkei 225 reached its highest point ever on December 29, 1989, at 38,915. 87

The new GDP data might also mean that the country’s central bank will wait even longer to decide to increase the cost of borrowing.

The Bank of Japan made interest rates below zero in 2016 to encourage people to spend and invest more money.

Negative rates make the yen less appealing to people around the world, so the value of the currency has gone down.