India expected to be No 4 economy by 2027, says IMF

The International Monetary Fund projects India will become the world's fourth-largest economy by 2027, surpassing Japan, according to its latest projections released on Thursday. In 2027, India is expected to have a nominal gross domestic product (GDP) of $4.52 trillion, while Japan is anticipated to drop to sixth place, behind India and the United Kingdom.

India has demonstrated robust growth despite global economic challenges, with the IMF raising its 2026 growth forecast to 7.0 percent this week. In contrast, Japan has struggled with an aging population and other structural issues that have stalled its growth. The United States remains the world's largest economy, followed by China and Germany.

Asia Director Krishna Srinivasan stated that India entered the current energy price shock caused by the US-Zionist entity war on Iran from a strong position, attributing its resilience to strong fundamentals, fiscal prudence, and substantial reserves. As a result, India responded effectively to the shock.

Japan's growth is projected to decelerate to 0.7 percent in 2026, primarily due to the surge in energy prices and inflation, which has prompted the Bank of Japan to raise interest rates to their highest level in three decades. The yen's decline to its lowest level in 40 years against the dollar has exacerbated import costs, while Japan's aging population further dampens economic activity.

Although the IMF's Srinivasan noted that Japan is benefiting from increased investments in artificial intelligence, this advantage is less significant compared to its regional competitors. The Nikkei index in Tokyo fell nearly 5 percent on Thursday, following a sharp decline in tech stocks due to concerns over the profitability of the AI sector.