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Japan loses its ranking as the world’s second-biggest economy

14 February 2011 10:11 (UTC +04:00)

Baku - APA-Economics. Japan lost its 42-year ranking as the world’s second-biggest economy to China in 2010, with data out Monday showing a contraction in the last quarter due to weak consumer spending and a strong yen, AFP reported.

Japan’s real gross domestic product slipped by an annualised 1.1 percent in the October-December quarter as the expiration of auto subsidies hit car sales, a new tobacco tax sapped cigarette demand and a strong yen hurt exports.

While the first contraction in five quarters was not as severe as forecasts of a 2.4 percent slide, Japanese GDP data is subject to constant revision.

The economy grew 3.9 percent in 2010, its first annual growth in three years. But this was not enough to keep it ahead of surging China.

Nominal GDP of $5.474 trillion in 2010 put Japan behind China’s $5.879 trillion, the data showed.

Despite Japan crawling out of a severe year-long recession in 2009, its recovery remains fragile with deflation, high public debt, weak domestic demand and a strong yen all concerns for policymakers.