Tokyo, 15 February 2024 (dpa/MIA) - Japan has lost its status as the world's third-largest economy to Germany as it unexpectedly slipped into recession in the final quarter of last year due to weak domestic demand.

The government in Tokyo said on Thursday that Japan's nominal gross domestic product (GDP) in 2023 totalled $4.21 trillion, a figure which relegates Japan to number four in the global economy behind Germany's $4.46 trillion.

This is mainly due to the sharp fall in the value of the yen. In the quarter October to December, Japan's economy shrank by 0.1% compared to the previous quarter for the second quarter in a row.

Two negative quarters in a row is the criterion for a technical recession.

Private consumption, which accounts for more than half of Japan's economic strength, fell by 0.2%, marking the third consecutive quarter of decline, the government said. Japanese households are struggling with the rising cost of living and falling real wages.

Corporate investment spending was also weak, falling by 0.1%.

"Germany overtaking Japan shows it is imperative for us to promote structural reforms and create a new stage for growth," said the Minister for Economic Revitalization, Yoshitaka Shindo, in Tokyo.

The US and China are the world's two largest economies.

Photo: MIA archive