India is on track to overtake Japan in nominal Gross Domestic Product (GDP) rankings, driven by sustained economic growth and a stable currency, while Japan faces stagnation and a weakening yen.
Key Predictions:
- International Monetary Fund (IMF): India could surpass Japan in GDP by 2025.
- Capital Economics: Initially forecasted the shift for 2026 but is revising predictions following recent developments.
- S&P Global Ratings: Projects the change by 2030.
Current Scenario:
In 2023, India’s GDP stood at $3.55 trillion, while Japan’s was $4.22 trillion, according to World Bank data. The IMF predicts 7% GDP growth for India in 2024 and 6.5% in 2025, compared to Japan’s modest growth forecast of 0.3% for 2024 and 1.1% for 2025.
Contributing Factors:
- Population Growth: India’s large and growing population underpins its economic momentum.
- Currency Impact: Japan’s weak yen against the dollar contrasts with India’s stable rupee, making India’s economy more competitive in market exchange rate comparisons.
- Resilient Growth: India has maintained steady economic expansion since 2000, while Japan has grappled with deflation and recessions.
Challenges and Perspective:
The GDP per capita for India, though, remains at a low of approximately $2,500 against the $34000 of Japan. This would therefore mean that there is a big and real difference in the living standards and income levels.
Economists also warn that any severe economic or political disruptions could change these timelines. However, India’s consistent rise in GDP, along with strategic policies, has placed it in a position whereby it could eventually surpass Germany as the third-largest economy in the world and move into third place behind the U.S. and China.
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Source: Japantimes
News Desk
