The IMF projects that India will overtake Japan as the world’s fourth-largest economy in 2027, with a GDP of $4.52 trillion, while Japan slips to sixth place behind both India and the United Kingdom.
The International Monetary Fund projects that India will become the world’s fourth-largest economy in 2027, overtaking Japan, with a nominal GDP of $4.52 trillion, according to reports of the Fund’s October World Economic Outlook published on 15 October. Japan, which is fourth now, will fall to sixth place in 2027, behind both India and the United Kingdom, according to the same reports.
The IMF’s estimate of Japan’s nominal GDP is $4.3419 trillion in 2026, rising to $4.4676 trillion in 2027, according to a search summary of Japanese coverage. India’s projected $4.52 trillion in 2027 is therefore about $53 billion above Japan’s $4.4676 trillion, a difference that is Delima News’ own calculation from the two published numbers.
The ranking is in US dollars, and that is why the weak yen matters. A prolonged depreciation of the yen reduces the dollar value of Japan’s economy even when GDP measured in yen increases, according to the search summary. The reports describe the yen as having hit 40-year lows.
India is expected to grow by 7.0% in 2026, while Japan’s growth is forecast to slow to 0.7%, according to the reports. The gap in growth rates, 6.3 percentage points, is a calculation by Delima News. Delima News has reported on the IMF outlook in a separate article, in which India’s forecast was 7.0%, although another report said that the forecast was raised from July.
The reports list Japan’s headwinds: an ageing population, inflation that has persisted since spring 2022, a weak yen and higher energy costs from conflicts in the region. The Bank of Japan has raised interest rates to their highest level in three decades, according to the report. Another summary puts Japan’s benchmark rate at 1.25%.
The IMF’s Asia director, Krishna Srinivasan, said that India entered the period with very strong fundamentals, in terms of fiscal discipline, reserves and economic resilience, despite global energy shocks, according to the report. This is his assessment and not a forecast.
The reports also mention artificial intelligence. Japan benefits from AI investment, but the gains are limited compared with its regional neighbours, as the fall in Tokyo’s stock market amid worries about technology profits shows, according to the report. The Nikkei 225 closed at 67,744 on 14 October, down 33 points, after a fall of 1,253 points on 13 October, according to a search summary.
The ranking has two parts that are easy to confuse. The IMF figures are nominal GDP in US dollars, which is affected by exchange rates, while the growth rates are in real terms, which are not. Japan’s economy may be producing more in yen but be worth less in dollars, which is the point of the reports, and India’s rise reflects both faster growth and the dollar value of its output.
The current order is the United States first, then China, then Germany, then Japan, according to the report, and the ranking will change only in 2027. The ranking is a matter of dollar conversion as well as growth, so it can change if exchange rates move, and projections for 2027 are subject to revision.
India’s central bank raised interest rates on 7 October as inflation rose, as Delima News reports separately, which is a factor in the outlook.
Image: The Marunouchi district of Tokyo (file photo; a stand-in image). Photo: Kakidai / Wikimedia Commons (CC BY-SA 4.0)
