India will overtake Japan in GDP ranking by 2025
New Delhi: India will soon overtake Japan to become the world’s fourth largest economy. This information was given in a Japanese media report on Thursday. This article published in the Japan Times is based on discussions with some economists in Japan, including Marcel Thieliant, Asia-Pacific head of Capital Economics.
According to our latest estimates, we expect India to overtake Japan in gross domestic product (GDP) by 2026. However, forecasts are being reviewed after recent events, Thieliant was quoted in the report. The article said that the International Monetary Fund (IMF) believes that India will overtake Japan in GDP in 2025. According to S&P Global Ratings, this may happen in 2030. According to economists, the factors that are working in India’s favor are that the country has steadily grown in terms of economic potential since 2000 and its GDP has already overtaken the UK in 2022. India now trades with 27 countries using its rupee instead of the dollar, highlighting its growing influence in global trade.
He further said that the country also accounts for 46 per cent of global digital transactions. India’s population growth and young population are key drivers of economic expansion. The IMF estimates that India’s GDP is projected to reach $4.339 trillion by 2025, higher than Japan’s $4.310 trillion. This outlook underlines India’s strong growth path and shows a significant lead over Japan.
Economists say that Japan, on the other hand, is struggling with persistent recession and decades-long deflation. Japan’s troubles have increased due to its ageing population and low productivity in various sectors. The weak yen also significantly affects Japan’s position in this ranking. Apart from this, structural reforms have failed in Japan due to opposition to change and digitalization. Long-serving employees often prefer traditional methods over new methods. Japan’s growth rate was 1.9 percent in 2023 after decades of stagnation.
The IMF estimates that it will grow at a rate of only 0.3 percent in 2024. The economies of China and Germany have already overtaken Japan. Until 2010, Japan was the world’s second largest economy. A senior official says that India’s influence in multilateral diplomacy and global and regional security as an economic power in the last decade is a sign of the country’s progress. India has overtaken Japan to become the third largest power in the Asia Power Index, reflecting its growing geopolitical stature.
