Japan falls to the world’s fourth largest economy after the United States, China, and Germany

Comparisons of national economies are based on nominal GDP, which does not reflect different national circumstances and is in dollar terms.

Last year, Japan’s nominal GDP was $4.2 trillion, or approximately 591 trillion yen. Germany’s announced last month was US$4.4 trillion or US$4.5 trillion, depending on currency conversion.

According to the Cabinet Office’s real GDP data, Japan’s economy contracted at an annual rate of 0.4% in the most recent October-December period, or -0.1% compared to the previous quarter. Real GDP for this year grew by 1.9% compared to the previous year.

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Real gross domestic product is a measure of the value of a country’s products and services. The annual rate measures what would happen if the quarterly rate continued for one year.

Both Japan and Germany have built their economies through strong small and medium-sized enterprises with stable productivity. In contrast to Japan, Germany has built a solid economic foundation against the backdrop of a strong euro and inflation. A weak yen also has a negative effect on Japan.

Tetsuji Okazaki, a professor of economics at the University of Tokyo, said the latest data reflects the reality of a weakening Japan, and that Japan’s presence in the world is likely to decline.

“A few years ago, for example, Japan boasted a strong automobile sector. But with the advent of electric cars, even that advantage has been shaken,” he said.

Mr. Okazaki said the gap between developed and emerging countries is narrowing, and it is certain that India will overtake Japan in terms of nominal GDP within a few years.

Immigration is one option to solve this country’s labor shortage problem. However, Japan is relatively open to foreign workers except as temporary guests, prompting criticism of lack of diversity and discrimination.

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Another option is robotics, which is becoming increasingly popular but not enough to solve the country’s chronic labor shortages.

Historically, Japan has been hailed as an “economic miracle,” growing from the ashes of World War II to become the second largest economic power after the United States, a status it maintained from the 1970s to the 1980s.

Entrepreneurs who built companies from humble beginnings, such as Honda Motor Co.’s Soichiro Honda and Panasonic’s Konosuke Matsushita, exemplified the hard work behind the scenes at Nippon Corporation.

Made in Japan products have gained a reputation for being cheap but of high quality, and some products have become coveted all over the world. Now those may be the good old days.

Okazaki said many factors are still unknown.

“But looking ahead to the next few decades, the outlook for Japan is bleak,” he said.