In the coming years, India is expected to overtake Japan as well, estimates the professor of economics.
In 2023, Germany surpassed Japan as the world’s third largest economy. The information comes from figures recently published by the Japanese government.
The statistics show how Japan has lost competitiveness at the same time as the population has aged and the birth rate has decreased, according to the analysts interviewed by the news agency AP.
For a long time, Japan was the world’s second largest economy, right after the United States. In the 2010s, China overtook Japan and now, for the first time in recent history, a European state
Japan’s GDP last year was 4.2 trillion dollars and Germany’s was 4.4 trillion dollars. The results of this kind of comparison depend significantly on the exchange rate, and they inevitably tell, for example, about the purchasing power of citizens.
The car industry is falling
Japan and Germany are both export-led economies with a strong sector of small and medium-sized enterprises.
The German economy has done well in recent years despite the strong inflation in the euro area. Meanwhile, a weak yen has hurt Japan.
The latest figures mean that Japan has less importance in the world, says an economics professor Tetsuji Okazaki from the University of Tokyo.
– Years ago, Japan had a strong car industry, for example. According to electric cars, even this advantage has been lost, Okazaki commented to the news agency AP.
According to the professor, India will also overtake Japan’s economy in the next few years, when the gap between rich and poor countries will shrink globally.
Solutions are being sought
In the 1970s and 1980s, Japan was referred to as the world’s economic miracle. For consumers, the Made in Japan label meant that the product was of high quality and affordable.
According to experts, there is no going back to those times, because Japan’s population structure and the world economy in general are very different from the Cold War years.
One way to solve Japan’s labor shortage would be to increase immigration. However, Japan has been reluctant to increase the number of migrants except for short-term foreign workers.
Another option is the automation of work and the utilization of robots, but so far this development has not been fast enough.
When thinking about Japan’s economic future, there are many unknown factors, says Professor Okazaki.
– But when we look at the coming decades, the outlook is bleak, Okazaki commented to the news agency AP.
Source: AP