Julian Ryall
The announcement that India will overtake Japan in nominal gross domestic product in dollar terms in 2025 has shocked Tokyo. Until 2010, Japan had been home to the world's undisputed second-largest economy, but it's now on the brink of slipping to fifth place.
In estimates released in late April, the International Monetary Fund indicated that India's nominal GDP will reach $4.34 trillion (€4.03 trillion) in 2025, surpassing Japan's $4.31 trillion. The timing of India's surge into fourth place comes one year earlier than the IMF's last estimate, due in large part to the weakness of the Japanese yen.
Japan's decline in the global economic standings follows the government's confirmation that the nation had slipped behind Germany in 2023. The shock at India likely surpassing Japan next year is comparable to 2010, when a buoyant China replaced Japan as the world's second-largest economy.
"For Japan, this is a very big concern — but few people are talking about it openly because it is embarrassing and very difficult to solve," said Martin Schulz, chief policy economist for Fujitsu's Global Market Intelligence Unit.
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