As we reported earlier this week, Japan narrowly retained its lead over China last year as the world's second-largest economy behind the U.S., buoyed by recovering exports and rising consumer spending. Data released by Japan's Cabinet Office showed the country's inflation-adjusted gross domestic product grew at 1.1% in the fourth quarter and 4.6% on an annualized basis, beating analysts' expectations.

Japan's GDP last year totaled $5.09 trillion compared with China's $4.91 trillion. Economists said Japan's data suggest that a "strong cyclical recovery" is underway and a "spiral shrinking of Japan's nominal economy has come to a halt.” But despite the recovery, analysts still expect China’s GDP to surpass Japan, taking over the number two spot by the end of this year.

Last year China posted strong GDP growth of 8.7% while other nations were posting much smaller gains. China also overtook Germany last year as the world's largest exporter and the U.S. as the largest auto market in the world.