Germany is about to take a historic step in the context of the global economy. According to the latest forecasts, it is preparing to become the third largest economy in the world in 2023, ousting Japan from this position. This projection, supported by authoritative sources such as Bloomberg and Azernews. Is rooted in the recent weakness of the yen against the dollar and the euro.
The figures provided by the International Monetary Fund (IMF) are clear: the nominal Gross Domestic Product (GDP) of Germany is expected to reach $4.43 trillion this year, surpassing Japan’s $4.23 trillion. This result places Germany just behind economic giants like the United States and China.
These estimates emerge at a time when the yen is experiencing moments of particular weakness, approaching the value of 160 against the euro and touching the historical low of the last 33 years against the dollar. This situation led to a second currency intervention in October of last year. The last time the euro had reached a similar value against the yen was in August 2008. According to Kyodo, Japan might see its position as the third largest world economy waver by the end of 2023 due to a contraction of its nominal GDP.
The devaluation of the yen is at the heart of this economic revolution. It is estimated that Japan’s nominal GDP will decline in 2023, moving the country from third to fourth place globally. The IMF’s forecasts indicate that Germany will take Japan’s place.
Germany may not be the only country to surpass Japan
Looking to the future, the IMF’s projections until 2028 suggest that India, which recently surpassed China as the most populous country in the world with a population of over 1.4 billion inhabitants, might surpass Japan in terms of GDP by 2026. It’s interesting to note that in 1968, Japan had surpassed West Germany, becoming the second largest economy in the world after the United States, a position it held until 2010, the year it was overtaken by China.
The IMF estimates that Japan’s nominal GDP in 2023 will be around $4.23 trillion, down 0.2% from the previous year. On the contrary, Germany will see an increase of 8.4%, reaching $4.43 trillion.
In a broader context, the head of the IMF expressed concerns about the potentially negative impact of the conflict in Israel on the global economy.
In conclusion, 2023 is shaping up to be a pivotal year for the world economy, with Germany emerging as one of the main economic powers. These changes reflect the continuously evolving dynamics of the global economic landscape and underline the importance of closely monitoring economic trends and future forecasts.