India on track to leapfrog Japan in global GDP rankings
India is poised to become the world's fourth-largest economy in 2027, overtaking Japan in nominal GDP terms, a report has said.
According to an analysis by The Star, the IMF report underscored the diverging economic trajectories of Asia's two largest democracies.
The report's forecasts indicate that Japan is expected to retain the fourth position this year but India is projected to move ahead by 2027 with an economy valued at about $4.5 trillion.
The shift would push Japan down to sixth place, behind both India and the United Kingdom, it said.
The projected change comes as India continues to post robust economic growth despite an uncertain global backdrop.
Moreover, the highlighted growth forecast for India in 2026 to 7 per cent, highlighting the country's resilience amid geopolitical tensions and external economic shocks.
Earlier in October, speaking during the release of the IMF's Asia-Pacific regional economic outlook, a senior IMF official said India entered the recent surge in global energy prices from a position of strength, supported by solid growth, fiscal discipline and substantial foreign exchange reserves.
According to the IMF, these strong macroeconomic fundamentals have enabled India to navigate the impact of higher energy costs more effectively than many other economies.
Meanwhile, Japan continues to grapple with a range of structural challenges, including an ageing population, weak domestic demand and sluggish long-term growth.
The IMF has expected that Japan's economy to expand by only 0.7 per cent in 2026.
Higher energy costs and broader inflationary pressures have also weighed on the Japanese economy.
The country has witnessed sustained increases in consumer prices since 2022 with recent geopolitical developments adding to inflationary pressures through elevated fuel and energy costs.
“The fall of the yen, which hit its lowest level in 40 years against the dollar over the summer, is further driving up the cost of imports,” says The Star.
It further noted that Japan's ageing population is also weighing on economic activity.
