U.K. and Indian economies set to overtake Japan, IMF says

Japan’s nominal gross domestic product is forecast to slip to sixth place in 2027 behind the United Kingdom and India for the first time, according to the International Monetary Fund’s biannual World Economic Outlook released Tuesday.

According to the IMF report, Japan’s GDP will be ranked fourth this year at $4.34 trillion, followed by the U.K.’s $4.27 trillion and India’s $4.06 trillion. But in 2027, India ($4.52 trillion) will take fourth place, followed by the U.K. ($4.49 trillion), and then Japan ($4.47 trillion).

While an increasingly tumultuous global economy has contributed to a more opaque outlook, Japan has fallen in a number of economic rankings over the past few years as the weakness of the yen against the dollar shrinks the country’s purchasing power and rising costs place pressure on households. An aging population and low economic growth complicate its future.

The IMF first began publishing its World Economic Outlook, which maps and projects the economic status and prospects of countries, in 1980.

Previous forecasts have suggested the U.K. would overtake Japan in 2029, but this has been brought forward. Conversely, India had been forecast to overtake Japan in 2025, but that didn’t come to fruition.

In 2023, Japan, which had up to then been the world’s third-largest economy for around a decade, was overtaken by Germany.

Despite this, Japan’s GDP in the second quarter of this year was “better than what IMF staff had expected,” as government support helped to mitigate the impact of higher energy prices, according to the report.

The October 2026 World Economic Outlook, which was subtitled “Resilience Under Strain, Urgent Choices,” predicted challenges ahead. Global inflation is expected to reach 4.7% in 2026, driven by higher energy and food prices.

While 3.1% growth is projected globally for 2026, followed by 3.4% in 2027, the distribution of this expected to be somewhat uneven, with a “growing divide” driven by artificial intelligence investment and favorable terms of trade having a significant impact, said Deniz Igan, the division chief of the IMF’s Research Department.

In addition to opportunities, she also warned that AI can pose risks, particularly if expectations around its impact are overly optimistic.

“Over the long term, strengthening energy security, improving AI readiness, and preserving open trade and cooperation will be essential,” Igan said.