Defining moment: India overtakes Japan to become the world’s fourth-largest economy
- IBEF
- December 31, 2025
The World Bank, according to a recent report, states that India has surpassed Japan as the fourth-largest economy in the world. This is an important landmark in the economic history of India. This growth continues to be supported by an expanding workforce and rising savings rates among its middle-class population. As a result of these factors, India is currently experiencing an ideal economic period, characterized by strong growth and low and stable inflation rates. The World Bank's definition of this ideal period of economic performance is a "Goldilocks" period, meaning that India's economy is growing steadily while not creating any major upward inflationary pressure that would jeopardize overall stability.
According to the report, India’s growing economy has been aided by sustained domestic consumer purchasing, steady investment activity, and improved management of monetary and fiscal policies. This has been supported through structural reformation of its economy, increasing activity in manufacturing, and a rapidly growing service sector, supporting growth in India’s economy. In terms of growth and inflation, a healthy balance has created increased confidence in Indian investors and, as such, further solidifies India as one of the largest global growth engines. Therefore, overtaking Japan to move into 4th position of the global economy is indicative of how rapidly India's economic strength is increasing and demonstrates the strength and resilience of India’s macroeconomic system.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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