India is expected to overtake Japan as the world’s fourth-largest economy in 2027, according to International Monetary Fund projections. The forecast highlights contrasting economic trends across Asia. India’s nominal gross domestic product could reach $4.52 trillion that year. Meanwhile, Japan faces slower growth and several long-term economic challenges.
The IMF expects Japan to retain fourth place in 2026 before India moves ahead the following year. Japan could then drop to sixth place, behind India and the United Kingdom. The United States currently holds the top position, followed by China and Germany. These projections highlight changes in the global economic rankings.
Read more: IMF slams India’s economic data, downgrades to C-grade
India has maintained strong economic growth despite challenges in the global economy. This week, the IMF raised its forecast for India’s 2026 growth to seven per cent. The country also entered the current energy price shock with strong economic fundamentals. These factors have helped India respond to rising global energy costs.
Krishna Srinivasan, the IMF’s Asia director, discussed India’s economic position during the release of its Asia-Pacific outlook on Thursday. He highlighted the country’s fiscal discipline, substantial reserves and strong growth. Srinivasan said India had responded well to the energy shock linked to the US-Israel war on Iran.
IMF Growth Forecast 2026:
🇺🇸 US: 2.3%
🇩🇪 Germany: 1.3%
🇫🇷 France: 0.4%
🇮🇹 Italy: 0.8%
🇪🇸 Spain: 2.5%
🇬🇧 UK: 1.3%
🇯🇵 Japan:0.7%
🇨🇦 Canada: 1.1%
🇨🇳 China:4.5%
🇮🇳 India: 7.0%
🇷🇺 Russia:0.9%
🇧🇷 Brazil: 2.2%
🇲🇽 Mexico: 1.5%
🇸🇦 Saudi Arabia: -3.3%
🇳🇬 Nigeria: 4.2%
🇿🇦 South Africa: 1.0%
https://t.co/yoil3EB47M— IMF (@IMFNews) October 13, 2026
Japan faces mounting economic pressure from an ageing population and long-standing structural problems. The IMF projects Japan’s economy will grow by just 0.7 per cent in 2026. Higher energy costs and wider inflation have added to these challenges. These pressures continue to affect the country’s economic outlook.
Consumer prices in Japan have risen steadily since spring 2022, following years of deflation. Higher energy prices linked to the Iran war have added to inflation. The yen has also weakened, making imported goods more expensive. During the summer, the currency reached its lowest level against the dollar in four decades.
Japan has also benefited from growing investment in artificial intelligence, although Srinivasan said regional neighbours gained more. On Thursday, Tokyo’s Nikkei index fell nearly five per cent as technology stocks declined. Investors questioned whether the AI sector could generate enough profit. India’s projected rise and Japan’s expected decline could reshape global economic rankings in 2027.