New Delhi
India is poised to surpass Japan in GDP rankings by 2025, positioning itself as the world’s fourth-largest economy, according to a Japanese media report. This forecast, based on insights from economists including Marcel Thieliant, Head of Asia-Pacific for Capital Economics, suggests that India’s rapid economic growth will lead to a shift in global economic standings sooner than previously anticipated.
The International Monetary Fund (IMF) predicts India’s nominal GDP will reach $4.339 trillion by 2025, overtaking Japan’s $4.310 trillion. India’s ascent has been fueled by steady economic growth since the early 2000s, with the country’s GDP already surpassing that of the UK in 2022. Its expanding global trade influence is evident as it now conducts trade with 27 countries using the rupee instead of the dollar and accounts for 46% of global digital transactions.
In contrast, Japan’s economy has faced persistent challenges, including recurrent recessions, decades of deflation, and an ageing population. The country also struggles with low productivity and resistance to digitalization and structural reforms. Japan’s growth rate was just 1.9% in 2023, and the IMF forecasts a mere 0.3% increase in 2024.
India’s demographic advantage, with a young population and strong economic expansion, coupled with its growing geopolitical influence, positions it to rapidly close the gap with Japan and reshape global economic dynamics in the coming years.
