Japan’s economy slipped into recession after two quarters of contraction in the third and fourth quarters of last year, government data showed on Thursday.

The economy shrank at an annualized rate of 0.4 percent in the October–December period due to weak spending, the data showed. The real gross domestic product (GDP), the total value of goods and services produced in Japan, shrank 0.1 percent from the previous quarter, the government’s preliminary figures showed.

According to the Cabinet Office, this marked a contraction for the second quarter after a 0.8 percent decrease registered in the third quarter of 2023. Private consumption, which accounts for more than half of Japan’s GDP, fell 0.2 percent in the October-December period, dropping for the third quarter in a row as rising inflation amid real wage shrinkage continued to bite.

Business investment also contracted by 0.1 percent. Imports, whose growth impacts GDP negatively, expanded 1.7 percent, while exports grew 2.6 percent. Thursday’s data also showed that for all of 2023, Japan’s GDP in real terms expanded 1.9 percent, with a 5.7 percent growth in nominal terms.

Meanwhile, Japan lost its status as the world’s third-largest economy to Germany, as its nominal GDP for 2023, unadjusted for inflation, stood at 591.48 trillion yen (4.21 trillion U.S. dollars), less than the size of the German economy, which totaled 4.46 trillion dollars, according to local media.