India Set To Become World’s Fourth-Largest Economy In 2025, Surpassing Japan: IMF

India is on track to emerge as the world’s fourth-largest economy by 2025, overtaking Japan in terms of nominal Gross Domestic Product (GDP), according to the latest World Economic Outlook report released by the International Monetary Fund (IMF). The report projects India’s nominal GDP to rise to $4.187 trillion next year, narrowly surpassing Japan’s estimated GDP of $4.186 trillion.

This milestone reinforces India’s position as the fastest-growing major economy in the world. The IMF forecasts India’s economic growth to remain robust over the next two years, with the country expected to be the only major economy to maintain a growth rate exceeding 6 per cent through 2025 and 2026.

In contrast, Japan's economic expansion is projected to slow significantly. The IMF estimates a meager growth rate of 0.6 per cent for both 2025 and 2026, as the country faces headwinds from a global trade slowdown. This stagnation, coupled with India’s accelerating economic momentum, is expected to cause a shift in global economic rankings.

Looking further ahead, India is also projected to surpass Germany by 2028 to become the world’s third-largest economy. At that point, India’s GDP is expected to reach $5.584 trillion, while Germany’s economy is forecast to be valued at $5.251 trillion. Germany, according to the IMF, is likely to bear the brunt of the ongoing global trade tensions among European nations, with zero growth predicted for 2025 and a modest 0.9 per cent rebound in 2026.

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Other Major Economies

Meanwhile, the United States will retain its position as the world’s largest economy with a projected GDP of $30.5 trillion in 2025. China will follow as the second-largest, with an estimated GDP of $19.2 trillion. However, growth in these top economies is expected to moderate. The U.S. economy is forecast to expand by just 1.8 per cent in 2025, slowing further to 1.7 per cent in 2026.

Among European economies, Spain is expected to outperform peers with a 2.5 per cent growth rate in 2025, though this is predicted to ease to 1.8 per cent in 2026. The United Kingdom is projected to grow at 1.1 per cent and 1.4 per cent over the next two years, respectively. France’s growth is expected to remain subdued at 0.6 per cent in 2025 and 1 per cent in 2026, while the broader Euro Area will likely see growth slow to 0.8 per cent in 2025 before making a modest recovery to 1.2 per cent the following year.

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