NEW DELHI — India is projected to surpass Japan and become the world’s fourth-largest economy in 2027, driven by strong economic growth and widening differences in the economic performance of the two Asian nations, according to a report citing International Monetary Fund forecasts.
An analysis published by The Star indicates that Japan is expected to retain its position as the world’s fourth-largest economy in 2026 before India moves ahead the following year, with its nominal gross domestic product projected to reach approximately $4.5 trillion.
The report suggests Japan could fall to sixth place in the global economic rankings, behind India and the United Kingdom.
India’s projected rise reflects its continued economic expansion despite geopolitical uncertainty, higher energy costs and other pressures affecting global markets.
The IMF has forecast India’s economic growth at 7% in 2026, supported by domestic economic activity and relatively strong macroeconomic fundamentals.
Earlier this month, a senior IMF official said India entered the recent period of rising global energy prices from a position of strength, benefiting from sustained economic growth, fiscal discipline and substantial foreign exchange reserves.
According to the IMF, these factors have helped India absorb higher energy costs and navigate external economic shocks more effectively than many other economies.
Japan, meanwhile, faces longer-term economic challenges, including an aging population, weak domestic demand and sluggish growth.
The IMF expects the Japanese economy to expand by just 0.7% in 2026, significantly below India’s projected growth rate.
Rising energy prices and persistent inflation have added pressure to Japan’s economic outlook. Consumer prices have increased steadily since 2022, while geopolitical developments have contributed to higher fuel and import costs.
The weakening Japanese yen has further complicated the situation by making imported goods and energy more expensive.
“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,” The Star reported.
Japan’s aging population is also affecting its economic performance by constraining workforce growth and weighing on domestic consumption.
The anticipated shift in global rankings highlights the contrasting economic trajectories of India and Japan, with India’s faster expansion positioning it to move ahead in nominal GDP.
However, the rankings remain projections and could change depending on economic growth, currency exchange rates and global market conditions. (Source: IANS)
