N-Dollar Exchange Rate Approaches 150 Yen from 131 Yen
Falls to 5th Place Globally Behind India by 2026
Japan's nominal gross domestic product (GDP) is expected to be surpassed by Germany this year. As a result, Germany will rise to third place globally, while Japan is likely to fall to fourth place.
On the 23rd, Japanese local media including Kyodo News cited the International Monetary Fund (IMF) GDP estimate report, stating that Japan's nominal GDP this year is expected to decrease by 0.2% from last year to $4.2308 trillion (approximately 5726 trillion won). The IMF releases GDP forecasts every April and October.
Germany's nominal GDP this year is projected to reach $4.4298 trillion (approximately 5996 trillion won), an 8.4% increase from last year. This rise is due to relatively high inflation in Western Europe, which has increased nominal GDP accordingly.
The Japanese economy is also not immune to the effects of global price increases, but recent economic growth itself has been favorable. As of the second quarter of this year, real GDP increased by 1.2% compared to the previous quarter.
However, what negatively affected the nominal GDP ranking converted into dollars more than economic growth was the depreciation of the yen (weak yen). Last year, the average yen-dollar exchange rate in the Tokyo foreign exchange market was 131 yen per dollar. Currently, it is close to 150 yen per dollar.
Japan rose to become the world's second-largest economy after the United States in 1968, surpassing West Germany based on gross national product (GNP). However, due to the bubble burst and the recent low growth period known as the "Lost 30 Years," its economic ranking has continuously declined.
In 2010, Japan lost its position as the world's second-largest GDP to China, and this year, after 13 years, it is highly likely to fall to fourth place.
Kyodo News pointed out, "Japan faces issues such as declining labor productivity per capita, with a GDP smaller than Germany, which has two-thirds of Japan's population," and added, "By 2026, India, the world's most populous country, will rise to the fourth-largest economy, and Japan will become fifth."
According to IMF forecasts, the world's sixth-largest economy this year is expected to be the United Kingdom ($3.332 trillion, approximately 4483 trillion won). Following are France ($3.0049 trillion, approximately 4102 trillion won), Italy ($2.186 trillion, approximately 2941 trillion won), and Brazil ($2.1268 trillion, approximately 2862 trillion won).
According to the IMF, South Korea is projected to record $1.7092 trillion (approximately 2300 trillion won), securing the 13th position globally. This is one rank lower than Mexico and one rank higher than Australia.
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