Germany has surpassed Japan as the third largest economy, with a GDP of $4.5 trillion. Japan's economy stood at $4.2 trillion.
This does not mean that Berlin has outperformed Tokyo. In fact, the German economy had plunged by 0.3 per cent last year. Though Tokyo performed better than Berlin, the recent change in rankings comes amid Bank of Japan's move to maintain negative interest rates as well as yen's depreciation. The Japanese currency plunged over 18 per cent against the US dollar in 2022-23.
With a shrinking population and falling birth rate expected to worsen worker shortage in Japan, the country's GDP is likely to slump further in the future. China had overtaken Japan in 2010 and India, which has a growing young population, is also set to witness a rapid GDP growth in the coming years.
S&P Global Ratings in its Global Credit Outlook 2024 earlier said India is set to become the third largest economy in the world by 2030. However, the International Monetary Fund believes that India will become the third largest by 2027 as the country is projected to surpass Japan in 2026 and Germany the following year.
The US, which is the largest economy, makes up for a quarter of the world's GDP at $25.5 trillion. It is followed by China ($18 trillion GDP), Germany (S4.5 trillion GDP) and Japan ($4.2 trillion GDP).
According to the S&P, India will be able to realize its demographic dividend if it can unlock the labour market potential by upskilling workers and introducing more women to the workforce.
