India could overtake Japan in nominal GDP and become the world's fourth largest economy in 2026, according to global economists.
This refers to nominal GDP - the value of all final goods and services in a country's economy at current prices.
“Economic activity in the country will remain quite high thanks to strong domestic demand, public investment in infrastructure and growing consumption, especially among the urban population“, the study said.
According to the latest data from the World Bank, the US will remain the world's largest economy by nominal GDP in 2024, followed by China and Germany, which complete the top three. Japan has become the world's fourth-largest economy, while India is the fifth.
Analysts predict that India's working-age population will be the key driver of economic growth in 2026. Thus, 66% of the country's population is under 39 years of age, which "could create a large domestic market," experts explain.
The implementation of government programs aimed at restructuring the economic system will also stimulate growth. These include "Make in India", "Digital India", "Prime Minister Gati Shakti" and other initiatives aimed at creating new jobs, raising product quality standards and developing sectors from transport to healthcare. These factors will ultimately lead to India's GDP growth rate reaching 6.5-7% in 2026.
At the same time, experts note that the Indian economy may face a number of challenges. Problems such as underdeveloped transport infrastructure, surplus labor, high hidden unemployment, and low profitability in agriculture could become stumbling blocks for GDP growth.
“Therefore, in the next few years, before establishing a strong position in the global economy, the country will focus more on domestic socio-economic issues and the implementation of national programs“, RAS experts conclude.