India poised to surpass Japan in GDP ranking by 2025
India’s economy is on track to surpass Japan’s, positioning the country to become the fourth-largest economy in the world, according to a recent report in Japan Times. The analysis, which draws on insights from economists including Marcel Thieliant, Head of Asia-Pacific at Capital Economics, suggests that this shift could occur sooner than previously expected.
Thieliant indicated that, based on current forecasts, India was anticipated to surpass Japan by 2026, but recent trends have prompted a reevaluation of that timeline. The International Monetary Fund (IMF) now projects this transition to take place in 2025, while S&P Global Ratings is forecasting the change by 2030.
The shift in economic rankings underscores India’s rapid growth, which has been propelled by a combination of factors, including robust population growth, a young demographic, and rising global trade influence. In 2022, India’s GDP surpassed that of the United Kingdom, and the country’s use of its own currency, the rupee, in trade with 27 countries is further solidifying its position in the global economy. Notably, India also leads the world in digital transactions, accounting for 46 percent of global activity.
The IMF estimates that India’s nominal GDP will reach $4.339 trillion by 2025, surpassing Japan’s $4.310 trillion, marking a pivotal moment in the global economic landscape. Economists attribute this growth to India’s expanding economic potential since the turn of the millennium, coupled with its growing geopolitical influence.
On the other hand, Japan’s economic stagnation has been a cause for concern. The country has been grappling with recurring recessions, low productivity, and a chronic deflationary cycle, which have hindered its economic potential. Japan’s aging population and the high cost of maintaining a shrinking workforce have only compounded these issues. Additionally, the weakening of the yen and the country’s resistance to digitalization and structural reforms have further impeded its ability to adapt to modern economic demands.
In 2023, Japan’s GDP growth was a mere 1.9 percent, and the IMF predicts it will slow to just 0.3 percent in 2024. Once a dominant force in the global economy, Japan has already fallen behind China and Germany, with its ranking slipping from second place in 2010 to its current position as the world’s third-largest economy.
India’s ascension as an economic power is not only evident in its growing GDP but also in its expanding influence in global diplomacy and security. The country has solidified its position as the third-largest power in Asia, according to the Asian Power Index, overtaking Japan in the process. Analysts suggest that India’s increasing military and diplomatic capabilities, combined with its economic strength, position it to soon claim the fourth spot globally, defying expectations from international agencies.
A senior Indian official remarked, “India is outshining its advanced peers in economic, military, and diplomatic influence. With its rapid growth, the country is poised to surpass Japan much earlier than anticipated, signaling its emergence as a global economic powerhouse.”
As India moves toward this economic milestone, the world will be watching closely to see how it continues to leverage its demographic advantages, technological innovation, and diplomatic influence to reshape the global economic order.
