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Home > All news > Business, Economy > India to surpass Japan as 4th-largest economy in 2025 : IMF 

India to surpass Japan as 4th-largest economy in 2025 : IMF 

April 24, 2024
Reading Time: 2 minutes
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Tokyo - India’s nominal gross domestic product will likely outstrip Japan’s in 2025 to become the world’s fourth-largest economy, according to an International Monetary Fund estimate, a year earlier than the previous projection.

India’s GDP will likely total $4.3398 trillion in 2025, compared with Japan’s $4.3103 trillion, the IMF said in its latest estimate.

The IMF’s forecast in October had India surpassing Japan in 2026. In its April update, the IMF revised GDP forecasts for both countries slightly in local currency terms, but the depreciation of the Japanese yen looks to reduce Japan’s economy in dollar terms, hastening the country’s decline in the rankings.

Japan’s GDP was eclipsed by Germany in 2023. If it is overtaken by India, it will drop to fifth place.

The Indian rupee has largely remained flat against the dollar since the beginning of 2023 due to what appears to be intervention by the Reserve Bank of India. Currently, it stands at about 83 rupees per dollar.

In its December 2023 report on India, the IMF noted that the authorities’ intervention in the currency market was likely beyond the level needed.

The Indian central bank countered that the IMF was making an erroneous analysis based solely on short-term exchange rate trends.

India’s nominal GDP was the 10th largest in the world as of 2014. According to the IMF, it is expected to overtake Germany to become the world’s third-largest economy by 2027. India overtook Japan in domestic automobile sales in 2022 to become the world’s third-largest market after China and the United States.

Although the country suffered an economic slump during the COVID-19 pandemic, it has recorded high growth in recent years, driven by a rising population. The Reserve Bank of India expects GDP to grow 7% in real terms in fiscal year 2024.

Although India’s middle class is expanding, nominal GDP per capita is currently only in the mid-$2,000 range. This is about a fifth the level of China and close to that of Bangladesh.

Disclaimer: This information has been collected through secondary research and Daily Shipping Times is not responsible for any errors in the same.

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