India Set to Become World’s 4th Largest Economy in 2025: IMF
India is poised to surpass Japan and become the world’s fourth-largest economy in 2025, and is on track to overtake Germany by 2028, according to the International Monetary Fund (IMF).
New Delhi: India is poised to surpass Japan and become the world’s fourth-largest economy in 2025, and is on track to overtake Germany by 2028, according to the International Monetary Fund (IMF). The latest projections come from the April 2025 edition of the World Economic Outlook (WEO).
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India to Maintain Status as Fastest-Growing Major Economy
The IMF forecasts that India’s GDP will grow by 6.2% in 2025 and 6.3% in 2026, continuing its streak as the fastest-growing major economy in the world. This strong momentum places India well ahead of global and regional peers in terms of economic expansion.
India to Surpass Japan with $4.18 Trillion GDP
The WEO report projects India’s nominal GDP to reach $4,187.017 billion in 2025, enabling it to surpass Japan and claim the fourth position in the global economy rankings.
Global Growth Slows as India Leads
While India continues to grow, the global economic outlook remains subdued. The IMF has pegged global GDP growth at 2.8% for 2025 and 3.0% for 2026, underscoring India’s remarkable economic performance despite global headwinds.
IMF Revises Japan’s Growth Forecast Downward
In contrast, Japan’s growth forecast for 2025 has been revised downward to 0.6%, from the earlier 1.1% estimate in January. The IMF attributed this drop to the negative effects of new U.S. tariffs under former President Donald Trump, which have intensified global trade tensions.
Trade War Escalates Under Trump’s Tariff Policy
On April 2, Trump escalated the U.S.-led trade war by announcing new tariffs, sparking global economic concerns. A week later, he offered a partial reprieve with a 90-day suspension of new tariffs for all countries except China, on which higher retaliatory tariffs were imposed.
Moody’s Cuts India’s Growth Forecast Amid Rising Tensions
Meanwhile, Moody’s Ratings has also revised India’s GDP growth projection for FY2026, reducing it from 6.5% to 6.3%. The cut is attributed to increased tensions between India and Pakistan and global economic uncertainty.
Outlook: Strong Long-Term Prospects for India Despite Global Challenges
Despite global challenges, both the IMF and market analysts remain optimistic about India’s long-term growth potential, bolstered by domestic demand, digital infrastructure, and demographic advantages.
