The nominal gross domestic product of India is likely to outstrip that of Japan in 2025 to become the world’s fourth-largest economy, according to an International Monetary Fund (IMF) estimate. In late April, the International Monetary Fund (IMF) indicated that India’s nominal GDP would reach $4.34 trillion in 2025, surpassing Japan’s $4.31 trillion.
Japan’s GDP was eclipsed by Germany in 2023. If it is overtaken by India, it will drop to fifth place. The timing come one year earlier than the IMF’s previous forecasts and this is partly due to the weakness of the Japanese yen.
The Organization for Economic Cooperation and Development (OECD) heaped new pressure on Tokyo with the May 2 release of its latest report on the outlook for global economic growth.
The OECD has predicted 3.1% for world growth this year, and pushed up the US and China’s economic outlook, it actually cut Japan’s growth prediction this year from 1% to 0.5%.
The reasons, it believes, are due to geopolitical factors such as the war in Ukraine. An FT report says that the war has prompted higher costs for Japanese companies whose economic activity was already restricted due to the Omicron wave.
The uncertainty over the Japanese yen has further hurt economic activity and business confidence in Japan. This has led to higher cost of imports, and falling exports. Data showed Japan’s export fell in July 2023 for the first time in two-and a-half-years.
Japan’s Ministry of Finance (MOF) data showed that have Japanese exports have fallen 0.3% in July year-on-year. part of the reason is also to do with the fall in demand from China, Japan’s largest trading partner. China’s own economy is suffering from a lack of demand and President Xi’s reluctance to fully open up the market for imports.
India’s is a very different story as External Affairs Minister S Jaishankar pointed out to President Biden. Jaishankar made it clear that India’s “economy was not faltering” contradicting the US President’s remarks that it was.
The figures bear out Jaishankar’s contention. According to government statistics, India’s growth reached 8.4% in the final months of 2023 going beyond the 7.6% expected by the government in June-September period. A booming stock market, strong domestic consumption, stable rupee, and increased exports, are some of the key reasons.
Prime Minister Modi said in August 2023 that India’s shining economy was a beacon of hope in challenging economic times.
“With robust growth and resilient spirit, the future looks promising. Let us keep this momentum and ensure prosperity for 140 crore Indians,” he said on X.
(Agencies)
