In 2025,India set to overtake Japan as fourth-largest economy: IMF

India is set to overtake Japan and become the fourth-largest economy in the world in 2025,  according to the International Monetary Fund (IMF) World Economic Outlook (WEO) report.The IMF projected India's nominal GDP to reach $4.187 trillion, just ahead of Japan's $4.186 trillion. This marks a significant shift from 2024, when India was the fifth-largest economy, with a GDP of $3.9 trillion, trailing Japan's $4.1 trillion. The Indian economy's expansion underscores its rapid growth, which has consistently outpaced other major economies.
The IMF's World Economic Outlook from April 2025 showed India's growth trajectory, predicting a 6.3% real-term increase in 2025, down slightly from an earlier forecast of 6.5%. Despite this revision, India remains the fastest-growing major economy, with further projections indicating a growth rate of 6.2% in 2025 and 6.3% in 2026. In contrast, Japan's economy is expected to grow by just 0.6% in 2025, reflecting a more modest economic performance. These projections highlight the diverging economic paths of the two nations.
The IMF's data suggested that India's robust economic performance will continue, driven by strong domestic demand and favourable demographic trends. The anticipated growth comes amid global economic uncertainties, including trade tensions and policy shifts that have impacted many developed economies, including Japan. Japan's economic outlook has been hampered by external pressures, notably from ongoing trade conflicts. The IMF recently downgraded Japan's 2025 growth projection to 0.6% from 1.1% in its January forecast, reflecting the negative impact of increased tariffs, particularly those imposed by the United States.

Germany, currently the fourth-largest, is expected to be among the worst affected European economies due to ongoing trade tensions. The IMF projects zero growth for Germany in 2025, followed by a modest recovery of 0.9 per cent in 2026. Its GDP is estimated to reach 5,251.93 billion dollars by 2028.
The United States will retain its position as the world’s largest economy, with a projected GDP of 30,507.22 billion dollars in 2025. China, the second-largest, is expected to record a GDP of 19,231.71 billion dollars.The IMF notes that the US economy, having initiated a wave of global tariffs, is showing signs of a slowdown. Growth is forecast to dip to 1.8 per cent this year and 1.7 per cent in 2026.

(Business Correspondent)