Germany Set to Overtake Japan Economically

In 2023, Germany is expected to surpass Japan as the world's third-largest economy, benefitting from a depreciation of the yen against the dollar and euro. According to the latest projections by the International Monetary Fund (IMF), Germany's nominal GDP for the year is estimated at $4.4 trillion, while Japan's stands at $4.2 trillion. This would position Germany behind only the United States and China in terms of economic size. The weakening of the yen can be attributed to significant disparities in monetary policy. The Federal Reserve and the European Central Bank have increased interest rates from pandemic-induced lows to address inflation concerns, whereas the Bank of Japan has maintained its stimulus measures in pursuit of fostering price growth after a prolonged period of deflation. These projections also indicate more consistent long-term economic growth in Germany, potentially causing concern among Japanese policymakers as they contemplate the details of their latest economic stimulus package.