Holiday Ayo - Japan unexpectedly fell into recession after its economic growth contracted for two consecutive quarters. This condition forced Japan to hand over the position of the third largest economy in the world to Germany.

Quoted from CNN, Japan's Gross Domestic Product (GDP) declined at an annual rate of 0.4 percent in the last three months of 2023. This was stated by the Cabinet Office on Thursday (15/2). 

In the third quarter, the Japanese economy experienced a contraction of 3.3 percent. Fourth-quarter GDP fell short of estimates of 1.4 percent growth, in a Reuters poll of economists. 

A country is said to be entering a recession if its economy experiences contraction for two consecutive quarters. 

The data confirms that Japan's economy is now the fourth largest country in the world after Germany in US dollars last year. 

Quoted from CNBC, throughout 2024, Japan's nominal GDP will grow 5.7 percent compared to 2023 to 591.48 trillion yen or USD 4.2 trillion based on the average exchange rate in 2023. 

Germany experienced nominal GDP growth of 6.3 percent to reach 4.12 trillion euros or USD 4.46 trillion. Personal consumption, which accounts for half the economy, fell 0.2 percent as Japanese consumers struggled with rising prices for food, fuel and other goods. 

Japanmacro analyst Neil Newman told CNN that Japan imports 94 percent of basic energy needs and 63 percent of food, so the weakening yen significantly contributes to higher living costs. 

“Private consumption is very weak and market expectations will remain flat," he said. 

He said, unfortunately things would get worse in January after the earthquake in Japan. 

“People stop shopping when natural disasters occur," he said.