India’s position is expected to become stronger in the competition among the world’s major economies. According to the estimates of International Monetary Fund i.e. IMF, India can overtake Japan and reach fourth place in the global economic ranking in the year 2027. At present America, China and Germany are ahead of India in this list. IMF has increased India’s economic growth forecast for 2026 to seven percent.
This assessment comes at a time when the impact of energy prices, geopolitical tensions and trade uncertainties is visible in many parts of the world. India’s potential growth is being linked to the strength of domestic economic activity. However, the actual order of the rankings may be affected by factors such as future economic growth and currency exchange rates.
Many difficulties facing Japan’s economy
IMF’s assessment has predicted that Japan’s economic growth will be only 0.7 percent in the year 2026. The country continued to go through a situation of deflation i.e. falling prices for a long time, but after spring 2022, there has been a continuous upward pressure in consumer prices. Along with this, expensive supply of energy has also increased economic challenges. The pressure created in the energy market due to the war related to Iran may affect an import dependent country like Japan.
Due to the weakening of the Japanese Yen against the US Dollar, the cost of goods purchased from abroad also increases. Additionally, Japan’s aging population poses a long-term challenge to the availability of working people and the pace of economic activity.
Japan benefits from AI investment, but gains limited
According to Krishna Srinivasan, Director of IMF’s Asia and Pacific Department, Japan is benefiting from increasing investment in Artificial Intelligence (AI). However, he estimates that the benefits from the sector are limited compared to some other Asian economies. Investment in technology can be an important means of economic growth, but the level of benefits it provides also depends on productivity, the extent of investment, and labor market conditions. Amid these long-term challenges facing Japan, accelerating economic growth remains important.
IMF welcomes changes in India’s GDP calculations
The IMF has supported the changes made in the way India calculates its Gross Domestic Product (GDP). According to the institution, the amendments are in line with international best practices and advice given by its statistics department. Srinivasan described the improvement in data methodology as a positive step and appreciated the efforts of the Ministry of Statistics and Program Implementation. They also indicated that further improvements could be made to improve the quality of the data.
Debate continues on growth rate figures
There has also been discussion recently about India’s economic growth. According to government data, the country’s GDP growth in the June quarter was 7.8 percent. After this, former Finance Secretary SC Garg raised questions on the credibility of the data, while opposition parties also expressed concern over the method of calculation. Chief Economic Advisor V. Ananth Nageswaran rejected the criticism, saying that the use of the new base year had also resulted in a revision of the figures for the previous period.
Along with global ranking, reliability of data is also important
India’s projection of overtaking Japan indicates a possible change in the country’s economic condition. But the strength of an economy is not determined only by global ranking. Employment, per capita income, inflation and economic condition of common people are equally important parameters. Therefore, along with India’s potential growth, it will also be important to see to what extent the benefits of development reach different sections of the society and how the transparency of economic data is strengthened.