Will Japan Fall Out of the World's Top Five Economies? India and UK to Overtake One After Another

IMF World Economic Outlook GDP Projections
Japan Projected to Fall Next Year, Overtaken by India and the United Kingdom

Japan's economy is expected to be overtaken by India and the United Kingdom next year, dropping to sixth place in the world. The decline is attributed to low growth and the yen's chronic weakness.

Yomiuri Online reported on the 13th (local time), citing the latest World Economic Outlook released by the International Monetary Fund (IMF), that Japan's economy is expected to fall from fourth place in the world currently to sixth next year.

A bustling street in Harajuku, Japan. AFP-Yonhap News.

The IMF publishes its economic outlook for the current year and the following year together each October. According to IMF data, Japan's nominal gross domestic product (GDP) is expected to be $4.3419 trillion this year, roughly on par with the United Kingdom's $4.2684 trillion. They rank fourth and fifth in the world, respectively. India, currently ranked sixth, recorded $4.0602 trillion.

Next year, however, the rankings from fourth to sixth are expected to be completely reshuffled, with India at $4.5211 trillion, the United Kingdom at $4.4889 trillion and Japan at $4.4676 trillion. India, an emerging economy, has recorded a high average real growth rate of 7% to 8% a year. The United Kingdom is expected to maintain a higher growth rate than other developed European countries, benefiting from factors such as increased investment in artificial intelligence (AI). Japan, by contrast, has a low economic growth rate, and the yen continues to weaken against the dollar.

Nominal GDP, a measure of a country's economic power, is calculated by converting each country's currency into dollars, based on the combined figure of real growth and the GDP deflator (the overall price level in a country for producing GDP). In other words, for Japan to retain its position among the world's five largest economies, both the yen and economic growth must rebound.

Japan rose to become the world's second-largest economy in 1968, propelled by rapid growth after World War II. However, after being overtaken by China in 2010, it continued to slip, ceding third place to Germany in 2023. This will be the first time since 1960, 67 years ago, that Japan has fallen out of the world's five largest economies.

The IMF said that this year the global economy had “offset the negative effects of rising energy prices, thanks to the driving force of demand for AI.” It also warned that “countries highly dependent on resource imports and facing continued currency weakness will need to manage inflation and exchange-rate volatility well in order to maintain the size of their economies.”

This content was produced with the assistance of AI translation services.