The Asian giant fell into an unexpected recession, and Japan lost its position as the world’s third largest economy to Germany.
Japan, once the world’s second-largest economy, on Thursday reported its second consecutive quarter of economic contraction. The revised annualized rate for the third quarter was a decrease of 3.3%, but the annualized rate of decline for the fourth quarter was 0.4%. Fourth-quarter GDP was well below the 1.4% growth forecast in a Reuters survey of economists.
Recession is generally defined as two consecutive quarters of recession.
GDP decreased by 0.1% from the previous quarter, while a Reuters poll expected it to increase by 0.3%.
For 2023 as a whole, Japan’s nominal GDP increased by 5.7% compared to 2023, reaching 591.48 trillion yen, or $4.2 trillion, based on the average 2023 exchange rate. Germany, on the other hand, recorded a nominal GDP growth rate of 6.3%, or 4.12 trillion euros, or $4.46 trillion, based on last year’s average exchange rate.
Nominal GDP measures the value of output in current dollars, without adjusting for inflation.
Following the latest GDP announcement, the Nikkei Stock Average rose 0.65%, and at one point exceeded 38,000 points in the morning. Investors viewed weak economic indicators as a sign of the Bank of Japan’s withdrawal, potentially slowing Japan’s long period of negative growth. interest rate policy. The yen exchange rate continues to hover around 150 yen against the dollar, and as of 1:55 p.m., it was trading at 150.2 yen. Tokyo time.
“This dire growth picture makes it even more difficult for the BOJ to tighten policy,” Charu Chanana, head of foreign exchange strategy at Saxo Markets, said in a Feb. 15 note.
Chanana said in an earlier note that the third quarter GDP decline “weakens the conviction around whether inflation is really driven by a virtuous cycle of increased real income and spending.”