Japan's economy is projected to fall to sixth place in the world next year, overtaken by India and the United Kingdom. This marks a two-step decline, following a drop to fourth place behind Germany four years ago. Notably, the timeline for the UK to surpass Japan has been moved up by two years compared to the International Monetary Fund's (IMF) forecast from April.
According to the IMF's World Economic Outlook released on October 13, Japan's nominal GDP for 2027 is expected to be $4.4676 trillion. In the same year, India is projected to reach $4.5212 trillion, while the UK is expected to hit $4.4889 trillion, placing them fourth and fifth, respectively. The United States, China, and Germany are expected to maintain their positions in the top three.
The gap between Japan and the UK is estimated at $21.3 billion, which is only about 0.5% of Japan's economic size, indicating that actual rankings could change due to future exchange rate fluctuations.
Of particular interest is the timing of the UK's overtaking. Under the IMF's previous forecast from April, India was expected to surpass Japan in 2027, and the UK in 2029. The latest forecast now indicates that the UK will overtake Japan in 2027. In the April forecast, Japan's nominal GDP for 2027 was estimated at $4.5616 trillion, about $95.5 billion higher than the UK's $4.4661 trillion. The new forecast shows the UK surpassing Japan by $21.3 billion, reversing the GDP projection gap by approximately $116.8 billion in just six months.
Comparing the IMF's April and October data, Japan's nominal GDP forecast in dollar terms for 2027 has been revised down by $94 billion, while the UK's has been adjusted upward by about $22.9 billion. However, Japan's nominal GDP forecast in yen terms has increased from ¥700.1877 trillion in April to ¥707.6744 trillion in October, a rise of about 1.1%. The forecast for real economic growth has also been slightly raised from 0.6% to 0.7%. Despite the increase in the economic size calculated in its own currency, the dollar-denominated forecast has decreased.
When breaking down the changes in GDP in yen and the effects of exchange rates, the upward revision in yen terms contributed an increase of about $48.8 billion to the dollar-denominated GDP forecast. However, the yen's value was reflected at about 3% lower against the dollar, resulting in a decrease of approximately $142.8 billion. The decline in the dollar-denominated GDP forecast has been significantly influenced by changes in the yen's value.
Japan's economy is shrinking relative to other major countries, partly due to its low growth rate. The IMF projects Japan's real economic growth rate for this year at 0.7%. In comparison, the UK is expected to grow at 1.3%, India at 7.0%, and South Korea at 3.3%, all higher than Japan. Japan's dollar-denominated GDP is expected to increase from $4.342 trillion this year to $4.4676 trillion next year, but the GDP of India and the UK is projected to grow at a larger rate, leading to Japan's decline in ranking.
* This article has been translated by AI.
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