Japanese angst as India set to become 4th largest economy

Deutsche Weil ^ | 10th May 2024 | Julian Ryall

[Cronos]

Once an economic powerhouse that was the envy of much of the world, there is deep concern in Tokyo that the economies of China and Germany have already surpassed Japan's — and that India's will do so next year.

The announcement that in 2025 India will overtake Japan in nominal gross domestic product in dollar terms has shocked Tokyo, which had until 2010 been the undisputed second-largest economy in the world but is now on the brink of slipping to fifth place.

In estimates released in late April, the International Monetary Fund (IMF) indicated that India's nominal GDP will reach $4.34 trillion (€4.03 trillion) in 2025, surpassing Japan's $4.31 trillion. The timing of India's surge into fourth place in the world comes one year earlier than the IMF's last estimate, due in large part to the weakness of the Japanese yen.

Japan's decline in the global economic standings follows the government's confirmation that the nation slipped behind Germany in 2023. The shock at India likely surpassing Japan next year is comparable to 2010, when a buoyant China replaced Japan as the world's second-largest economy.

...The whole idea of Abenomics was to drive growth at businesses, but structural reforms were also needed to push productivity, but that is very hard to do in a country that is aging and where there is resistance to change, to digitalization and people who have been in positions for a long time simply prefer the old ways

... Japan could not match India's investment in infrastructure and a rapidly growing middle class, Fink added, while Germany had surpassed Japan primarily on the precipitous drop of the yen against the euro over the last 12 years — a decline of 40% that put the real exchange rate effectively at a 50-year low.

[Wuli]

And why wouldn’t a nation with the largest population become a larger economy than a nation with 1/11th its population?