DIGIVESTASI - Japan entered recession on Thursday (February 15), losing its position as the world's third-largest economy. Japan's economic growth rate has been negative for two consecutive quarters. This is an indicator that the economy is in a technical recession. 

The economic growth rate for the third quarter of 2023 is estimated at -3.3% on an annualized basis (compared to the same period last year). In the fourth quarter of 2023, the economy fell again to -0.4% (year-on-year). With this weak development, Japan is no longer the world's third-largest economy.  The Sakura fell one place to replace Germany in the top three. 

As the nominal GDP comparison is based on dollars, the depreciation of the Japanese yen is the main reason for the downgrade to 4th place. However, economists believe that in addition to the population decline, the decline in productivity and competitiveness will also be the trigger. 

Tetsuji Okazaki, professor of economics at the University of Tokyo, believes the rise of electric cars is one of the reasons for Japan's weakening dominance in the automotive sector. "For example, a few years ago Japan had a strong automotive sector. However, with the rise of electric vehicles, this advantage is eroding," he was quoted as saying by the Associated Press.

Another important factor in Japan's slowing economic growth is wage stagnation, which causes households to spend too much. At the same time, the business community is also investing heavily in other countries where economic growth is rapid.

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