KATHMANDU: India is projected to surpass Japan to become the world’s fourth largest economy by 2027, according to the latest International Monetary Fund (IMF) forecast. India’s gross domestic product (GDP) is expected to reach 4.52 trillion US dollars by that year, while Japan is anticipated to drop to the sixth position.
Despite global economic challenges, India has maintained robust growth in recent years. The IMF recently revised its growth projection for India for 2026, raising it to 7 percent. Krishna Srinivasan, the IMF’s regional director for Asia-Pacific, stated that India is in a relatively strong position to handle energy price shocks due to its consistent economic growth, fiscal discipline, and substantial foreign exchange reserves.
In contrast, Japan’s economic growth has slowed due to an aging population and structural issues. The IMF estimates that Japan’s economic growth will remain limited to 0.7 percent in 2026. Rising energy costs and widespread inflation have placed significant pressure on the Japanese economy. Furthermore, the depreciation of the yen to a 40-year low against the US dollar has increased import costs for the country.
Srinivasan noted that while investments in artificial intelligence (AI) have provided some benefits to Japan, the impact has not been as significant compared to other economies in the region. Meanwhile, concerns regarding the profitability of AI-focused companies have led to a decline in technology stocks. On Thursday, Japan’s benchmark Nikkei index fell by approximately 5 percent.
