IMF Projects India Will Overtake Japan as Fourth-Largest Economy

The International Monetary Fund projects that India will become the world's fourth-largest economy by 2027, overtaking Japan. India's nominal gross domestic product is expected to reach $4.52 trillion, supported by a 7.0 percent growth forecast for 2026.

Japan is projected to slip to sixth place by 2027, falling behind both India and the United Kingdom. This decline is attributed to economic stagnation driven by an aging population, structural issues, and inflation linked to rising energy prices. The IMF notes that Japan has not benefited from the artificial intelligence investment boom as significantly as its regional neighbors.

To combat inflation and a weakening yen, the Bank of Japan has raised interest rates to a three-decade high. Krishna Srinivasan, the IMF Asia Director, attributed India's rise to strong fundamentals, noting that growth was strong and fiscal prudence was enshrined.