India to surpass Japan as fourth-largest economy in 2027: IMF

India is projected to overtake Japan to become the world’s fourth-largest economy by 2027, according to a forecast released by the International Monetary Fund (IMF) on Thursday, highlighting contrasting economic trends in the two Asian countries.

Japan is expected to retain its position as the world’s fourth-largest economy this year, based on gross domestic product (GDP). However, India is projected to surpass Japan in 2027, with a GDP of $4.52 trillion.

Japan is forecast to fall to sixth place next year, also slipping behind the United Kingdom. The United States remains the world’s largest economy, followed by China and Germany.

India has recorded strong economic growth in recent years despite global headwinds. Earlier this week, the IMF raised its growth forecast for India to 7% for 2026.

Japan, meanwhile, faces challenges from an ageing population and structural constraints that have weighed on its economic growth.

Krishna Srinivasan, the IMF’s director for Asia and the Pacific, presented the organisation’s regional economic outlook on Thursday. He said India had been in a strong position to withstand the energy shortages and price increases caused by the war in Iran.

Srinivasan said India’s economic fundamentals remained robust, supported by strong growth, prudent fiscal management and substantial foreign exchange reserves, helping the country weather the ongoing shocks.

In contrast, Japan’s economic growth is projected to slow to 0.7% this year. Rising energy prices and inflation have put pressure on its economy.

To address the situation, the Bank of Japan has raised interest rates to their highest level in around three decades.