India to overtake Japan in 2025, become fourth-largest economy, projects IMF

India is set to overtake Japan and become the fourth-largest economy in the world in 2025, reported the news agency Times of India, citing the International Monetary Fund (IMF) World Economic Outlook (WEO) report.

As per the news report, India's nominal GDP is expected to rise to $4,287.017 billion in the financial year 2025-26, higher than the $4,186.431 billion expectation of Japan's nominal GDP. 

In the World Economic Outlook report, India is expected to grow at a more “stable” rate in the year 2025, fueled by private consumption. However, the report also highlighted that this growth rate is 0.3 per cent lower than the previous estimates released in Janaury 2025.

“For India, the growth outlook is relatively more stable at 6.2 per cent in 2025, supported by private consumption, particularly in rural areas, but this rate is 0.3 percentage point lower than that in the January 2025 WEO Update on account of higher levels of trade tensions and global uncertainty,” according to the IMF World Economic Outlook report. 

As per the news portal's report, the United States is expected to lead with $30,507.217 billion in nominal GDP in 2025, followed by China with $19,231.705 billion, then Germany with $4,7,44.804 billion. The United States and China will continue to remain the top two economies in the world.

Population Age Equation

Comparing India and Japan on the ageing population equation, India is equipped with a younger generation and has emerged as the most populous nation in the world. On the other hand, Japan is expected to witness a slower pace of workforce contribution due to the population ageing issue. 

“The contribution is particularly large for India, for instance, as its share of workers ages 50 and older is projected to grow fast in that period, whereas it is relatively lower in Japan, as its share of older workers, though high, will grow at a slower pace over 2025–50,” according to the IMF report, released in late April.

However, the report also highlighted that the contribution to the growth from healthy ageing will gradually fade as workers transition through their late adult stage and into the retired category.

“Under current policies, the contribution to growth from healthy ageing would gradually fade as current cohorts of workers transition through their late adult stage and into retirement,” according to the WEO report.