According to recent estimates by the International Monetary Fund (IMF), India is projected to surpass Japan in nominal gross domestic product (GDP) in dollar terms by 2025. The IMF forecasts India's GDP to reach $4.34 trillion, slightly higher than Japan's projected $4.31 trillion. This shift is happening a year earlier than previously anticipated, largely due to the continued depreciation of the yen.
Japan's economy has been steadily slipping in global rankings. In 2023, it was surpassed by Germany, falling to the fourth-largest economy in the world. Factors contributing to India's rise include not only the weakened yen but also its robust economic growth, which outpaces Japan's. India's economy expanded by 7.8% in 2023, far surpassing Japan's 1.9% growth.
The key drivers of India's economic growth include its massive domestic demand, fueled by its population overtaking China's to become the world's largest in 2023. Additionally, India is attracting investment from advanced economies, while investment in China is slowing.
Experts attribute Japan's sluggish growth to government and central bank policies aimed at weakening the yen. They argue that relying on yen depreciation for economic growth has its limitations. Instead, there's a need to focus on boosting productivity through energy-saving initiatives and encouraging investment.
1 comment:
I wonder when Japan will be able to reignite their economic growth, and what it will take to accomplish that.
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