Japan's Economy Slides into Recession, Drops to Fourth in Global Economy Ranking

Japan's economy unexpectedly slipped into recession, shrinking for a second consecutive quarter due to weak domestic demand, prompting doubts about the Bank of Japan's plan to end its negative interest rate policy. The country's GDP shrank at an annualised pace of 0.4 per cent in the final quarter of 2023, leading to Japan losing its spot as the world's third-largest economy to Germany. The contraction complicates the likelihood of a rate hike, with household and business spending declining amid persistent inflation, while external demand remains a key source of support for growth.