Daily Management Review

Germany forecasted to become the world's third economy in place of Japan


According to IMF predictions, in 2023 Germany is expected to overtake Japan as the world's third largest economy.

Germany will surpass Japan in 2023 to become the third-largest economy globally after the US and China, according to Bloomberg, which examined the most recent IMF projections.

By 2023, Germany's GDP will rise to $4.43 trillion, while Japan's GDP will be $4.23 trillion in dollars. German GDP is expected to surpass that of Japan in 2024 ($4.7 trillion vs. $4.29 trillion) and 2025 ($4.96 trillion and $4.45 trillion, respectively), according to IMF projections. Japan's GDP hit $4.24 trillion last year, while Germany's reached $4.01 trillion.

The average gross domestic output per capita in Germany is expected to be $52,824 by the IMF, whereas it is $33,950 in Japan.

The yen's decline versus the dollar and the euro is a backdrop against which the IMF makes its estimates. The Japanese yen has dropped to its lowest level against the euro since 2008, and it is now almost at its lowest point in 33 years against the dollar. According to Bloomberg, the main cause of the yen's depreciation is the fundamental contrasts in the monetary policies of central banks.

The Bank of Japan has continued to operate in stimulus mode in an effort to raise prices following years of deflation, while the European Central Bank and the U.S. Federal Reserve have been raising interest rates from historic lows to combat inflation.

source: bloomberg.com