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India surpasses Japan to become the world’s 4th largest economy

26 May 2025 18:17 IST

India has overtaken Japan to claim the fourth position among the world’s leading economies, driven by sustained proactive policies supporting economic activities and accelerating growth, the Indian public policy think tank Niti Aayog stated on Monday. This milestone marks a significant achievement for the Indian government and its citizens, who have demonstrated accountability and taken favorable actions to reach this goal. India is now positioned within close range of becoming the world’s third-largest economy, currently held by Germany.

Speaking to reporters after Niti Aayog’s 10th Governing Council Meeting, Niti Aayog Chief Executive Officer (CEO) B.V.R. Subrahmanyam said, “We are the fourth-largest economy as I speak. We are a US$4 trillion economy, and this is not my data; it’s IMF (International Monetary Fund) data. India today is larger than Japan. Only the United States, China, and Germany are currently ahead of us. If we stick to what is being planned and thought through, it’s just a matter of another 2 to 3 years before we become the third-largest economy.”

World’s top 10 economies

Countries

GDP size (US$ trillion)

United States

30.51

China

19.23

Germany

4.74

India

4.19

Japan

4.19

United Kingdom

3.84

France

3.21

Italy

2.42

Canada

2.23

Brazil

2.13

Sources: International Monetary Fund (IMF), and Polymerupdate Research

The IMF had projected in the May 2025 edition of its World Economic Outlook (WEO) that India was on track to surpass Japan to become the world’s fourth-largest economy. Economists now believe that India is likely to surpass Germany in terms of economic size within 2–3 years, becoming the third-largest economy globally. The IMF’s WEO report, released earlier this month, underscores these projections. Subrahmanyam reiterated, “If we stick to what is being planned and thought through, it’s just a matter of another 2, 2.5 to 3 years before we become the third-largest economy.”

Economic size
The IMF, in its World Economic Outlook (WEO) report released recently, projected India’s GDP to rise to US$4.187 trillion, surpassing Japan’s economy at US$4.186 trillion. India continues to be the world’s fastest-growing major economy and is the only country expected to record over 6 percent growth over the next two years. This rapid growth is anticipated to push India’s GDP to US$5.584 trillion by 2028, enabling it to overtake Germany and become the third-largest economy globally.

Germany, on the other hand, is projected to experience no GDP growth in 2025, followed by modest growth of 0.9 percent in 2026. The country is expected to be among the hardest hit in Europe due to the ongoing global trade war, with its GDP forecast to reach US$5.252 trillion by 2028. Japan is also likely to face challenges from the trade war, with its economic growth stagnating at 0.6 percent in both 2025 and 2026. The United States, which remains the world’s largest economy, is projected to achieve a GDP of US$30.507 trillion in 2025, followed by China at US$19.232 trillion.

Growth projections
India is poised to lead the global economy once again, with the IMF projecting it to remain the fastest-growing major economy over the next two years. According to the April 2025 edition of the IMF’s World Economic Outlook (WEO), India’s economy is expected to grow by 6.2 percent in 2025 and 6.3 percent in 2026, maintaining a significant lead over global and regional peers.

The April 2025 WEO reflects a downward revision in the 2025 forecast compared to the January 2025 update, due to heightened global trade tensions and growing uncertainty. Despite this slight moderation, the overall outlook remains robust. This consistency underscores the strength of India’s macroeconomic fundamentals and its capacity to sustain momentum in a complex international environment. The IMF’s reaffirmation of India’s economic resilience further highlights the country’s growing prominence as a key driver of global growth.

The IMF noted that after several years of overlapping shocks, the global economy has entered a phase of cautious stabilization. Growth remains modest, and projections for global output have been revised downward since the January 2025 update. This reflects the impact of steep tariff increases, policy uncertainty, and slowing progress in international cooperation. While global inflation is expected to decline, the pace of reduction is slower than previously anticipated. Downside risks, including trade tensions and volatile financial markets, continue to weigh on the outlook.

For India, however, the growth outlook remains relatively stable. The IMF projects steady expansion for the Indian economy, supported by strong private consumption, particularly in rural areas. In a global environment marked by uncertainty and subdued growth, India’s resilience stands out, reinforcing its role as a critical driver of global economic activity.

India is projected to remain the fastest-growing large economy in both 2025 and 2026, reaffirming its dominance on the global economic stage. The country’s economy is expected to expand by 6.2 percent in 2025 and 6.3 percent in 2026, significantly outpacing many of its global counterparts. In contrast, the IMF forecasts global economic growth to be much lower, at 2.8 percent in 2025 and 3.0 percent in 2026, highlighting India’s exceptional outperformance.

Outlook
India’s economic outlook for 2025 and 2026 remains among the brightest of major global economies, as highlighted by the IMF. Despite global uncertainties and downward revisions in growth forecasts for other large economies, India is poised to maintain its leadership in global economic growth. Backed by strong fundamentals and strategic government initiatives, the country is well-positioned to navigate the challenges ahead. Through reforms in infrastructure, innovation, and financial inclusion, India continues to strengthen its role as a key driver of global economic activity. The IMF’s projections reaffirm India’s resilience, further solidifying its significance in shaping the future of the global economy.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com