• Mon. Mar 4th, 2024

Different Causes, Shared Challenges: Japan and Germany’s Economic Fights


Feb 13, 2024
Germany poised to surpass Japan as the world’s third largest economy.

Japan and Germany are both facing challenges in their economies, but they have different reasons for their struggles. While Japan’s economy is expected to fall behind Germany’s in the world ranking, this may be more due to the greenback than any true drawbacks. Currently the third-biggest economy, Japan may soon hand that bronze medal over to fourth-place competitor Germany. However, Japanese policymakers are optimistic as the economy is expected to have shrunk mainly due to the Japanese yen weakening against the dollar. In fact, when the greenback factor is removed, the economy likely picked up by 12%.

Germany’s production levels in the industrial sector were 1.6% lower in December from the month before, reaching a level 10% below the pre-pandemic rate. Germany knows firsthand how inflation can tilt the balance, as shoppers are paying more for less. For now, this is enough to keep them one step ahead of deflation-struck Japan. However, it seems that both countries will continue to face challenges with their aging and shrinking populations weighing heavily on various industries.

On a positive note, India’s population not only inched ahead of China’s last year but it also has a younger workforce which makes them on track to beat Germany’s economy as soon as 2027 according to the International Monetary Fund. With India having a spritely workforce and its growing population, it could make them an economic powerhouse in future years.

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