Japan Slips Into Recession, Loses Its Status As The World's Third Largest Economy

India¡¯s neighbor Japan has become the latest country to slip into recession, making the world¡¯s third largest economy slip to the fourth position as well.

Japan Slips Into Unexpected Recession

japan recession/getty

Due to weak domestic demand, Japan's economy shrank for a second quarter before unexpectedly entering a recession. As a result, some observers of the Japanese central bank have retracted their predictions regarding the end date of the country's negative interest rate policy, as per Bloomberg report.

The Cabinet Office announced on Thursday that the country's GDP (gross domestic product) shrank at an annualized rate of 0.4% in the last three months of the previous year, which followed a revised decline of 3.3% in the previous quarter. For the unversed, a country is considered to be in recession when its GDP falls for two successive quarters.

Germany Overtakes Japan As The World¡¯s Third Largest Economy

japan recession third largest economy germany/shutterstock

Slipping into recession has also resulted in Japan's economy losing its spot as the world's third largest economy, and is currently ranked fourth, with both households and businesses¡¯ spending reduced for a third consecutive quarter. Japan¡¯s recession means Germany currently has the third-largest economy in the world.

Also Read: How To Be Financially Prepared For A Recession

All 20 Eurozone Countries Had Entered Into Recession Last Year

eurozone recession/ap

Japan sinking into recession comes less than a year after Europe¡¯s largest economy Germany, as well as the entire 20 countries in the Eurozone, fell into recession. Germany had fallen into recession in May 2023, whereas the entire Eurozone countries suffered the same a few weeks later in June last year.

Upon confirming recession last year, Robert Habeck, Germany's economy minister, had said his nation's previous high dependency on Russia for energy supply led to the recession, but the growth forecasts were much bleaker. "We're fighting our way out of this crisis" he had added.

For the unversed, the ¡®Eurozone¡¯ is a currency union of 20 member nations of the European Union that have adopted the Euro as their primary currency and legal tender.

The list of countries which are a part of the Eurozone includes- Austria, Belgium, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

Also Read: Explained: What Is 'Balance Sheet Recession' And How China Has Landed Into It

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