India may become the world’s fourth-largest economy in 2027 — Dawn

India may overtake Japan in 2027 and become the world’s fourth-largest economy by nominal gross domestic product. The International Monetary Fund released this forecast, Dawn reports.

According to the IMF’s assessment, Japan will retain fourth place in the global nominal GDP ranking this year. However, in 2027, India’s GDP is expected to reach $4.52 trillion, allowing it to rise to fourth position.

Japan may fall to sixth place

According to the fund’s forecast, Japan will drop to sixth place in 2027, allowing India and the United Kingdom to move ahead. The source notes that the United States is the world’s largest economy, followed by China and Germany.

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This week, the IMF raised its forecast for Indian economic growth in 2026 to 7%. IMF Asia and Pacific Department Director Krishna Srinivasan said that India entered the period of the energy price shock with resilient fundamentals, substantial reserves and strong growth momentum.

Slower growth in Japan

At the same time, the IMF forecasts that growth in Japan’s economy will slow to 0.7% in 2026. It is being affected by more expensive energy and broader inflation, which prompted the Bank of Japan to raise interest rates to their highest level in three decades.

Japan’s economic activity is also constrained by an aging population. The weakening yen, which reached its lowest level against the dollar in 40 years this summer, further increases import costs. Srinivasan noted that Japan is benefiting from the boom in artificial intelligence investment, though less than other countries in the region. Tokyo’s Nikkei index fell by almost 5% that day amid a decline in technology stocks.