TOKYO (NEWSnet/AP) — Japan’s economy is now the world’s fourth-largest, falling behind Germany, after contraction in the last quarter of 2023.

The nation’s economy shrank at an annual rate of 0.4% October to December, according to Japan’s Cabinet Office data on real GDP released Thursday. Although it grew 1.9% overall in 2023, it contracted by 2.9% July-September.

Two straight quarters of contraction is considered an indicator an economy is in a technical recession.

Japan’s economy was the second largest until 2010, when it was overtaken by China. Japan’s nominal GDP totaled $4.2 trillion in 2023, while Germany’s was $4.4 trillion or $4.5 trillion, depending on the currency conversion.

A weaker Japanese yen was a key factor in the drop to fourth place, since comparisons of nominal GDP are in dollar terms. But Japan’s relative weakness also reflects a decline in its population and lagging productivity and competitiveness, economists say.

Real gross domestic product is a measure of the value of a nation’s products and services. The annual rate measures what would have happened if the quarterly rate lasted a year.

Historically, Japan was touted as “an economic miracle,” rising from the ashes of World War II to become the second-largest economy, behind the U.S.. That continued through the 1980s. For most of the past 30 years the economy has grown only moderately at times, mainly remaining in doldrums after the collapse of its financial bubble began in 1990.

Germany’s economy also contracted in Q4 2023, by 0.3%.

Germany and Japan economies both are powered by strong small- and medium-size businesses with solid productivity.

As an island nation with relatively few foreign residents, Japan’s population has been shrinking and aging for years, while Germany’s has grown to nearly 85 million, as immigration helped to balance a low birth rate.

Follow NEWSnet on Facebook and X platform to get our headlines in your social feeds.

Copyright 2024 NEWSnet and The Associated Press. All rights reserved.