Correct Answer :   Germany

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Germany has surpassed Japan as the world’s third-largest economy, primarily due to a significant depreciation in the yen compared to the stability of the euro. Japan’s economy, despite growing 1.9% last year (2023), contracted in the fourth quarter, leading to its relegation to the fourth position.

Reasons for Germany’s Overtaking :

* Currency Depreciation : The yen depreciated by over 18% against the dollar in 2022 and 2023, facilitating Germany’s ascendancy due to the stability of the euro against the dollar.
* Recession in Japan : Japan’s technical recession, marked by two consecutive quarters of economic contraction, contributed to its fall behind Germany in GDP rankings.

Comparative Challenges Faced by Both Economies :

* Labor Shortage : Both Japan and Germany confront significant labor shortages, impacting their economic growth prospects.
* Aging Populations : The demographic challenge of aging populations exacerbates economic concerns in both countries, with Japan facing a more acute scenario.

India’s Impending Economic Surge :

* Demographic Advantage : India’s youthful population, with a majority under 35, positions it for rapid economic growth compared to the aging populations of Japan and Germany.
* Higher Growth Rates : India’s higher growth rates, coupled with its demographic dividend, forecast its imminent leapfrogging of both Japan and Germany to claim the third position in the global economy.