"Once the World’s No. 2, Japan Expected to Fall to Sixth Behind India and UK, Japanese Media Analysis"

Yomiuri Analyzes Japan's Economy Citing IMF Projections
"UK to Overtake Japan in Nominal GDP by 2030"
Population Decline and Weaker Yen Seen as Key Factors

Japan's economic size is projected to fall to sixth place in the world by 2030, as it is overtaken by Germany, India, and the United Kingdom in succession. According to Yonhap News on October 16, citing the Yomiuri Shimbun, "Based on the International Monetary Fund (IMF) outlook, Japan, which was once the world's second-largest economy, is expected to drop to sixth place in terms of nominal Gross Domestic Product (GDP) by 2030."

Japan, once the world's second-largest economy, is projected to fall to sixth place in terms of nominal Gross Domestic Product (GDP) by 2030. Reuters Yonhap News

Japan became the world's second-largest economy in 1968, surpassing West Germany based on Gross National Product (GNP), which was the main economic indicator at the time. Since then, Japan ranked third in nominal GDP after the United States and China until 2022, but was overtaken by Germany in 2023, dropping to fourth place. According to IMF estimates, Japan is expected to fall behind India next year and become fifth, and by 2030, it is projected to be overtaken by the United Kingdom as well.

Japan's nominal GDP is forecast to reach 4.4636 trillion dollars (about 6,330 trillion won) in 2026 and 5.1198 trillion dollars (about 7,261 trillion won) in 2030. In contrast, India's GDP in 2026 is projected at 4.5056 trillion dollars (about 6,389 trillion won), and the United Kingdom's GDP in 2030 is forecast at 5.1997 trillion dollars (about 7,375 trillion won). While there have been previous predictions that Japan's economic size would become smaller than India's, specific reports mentioning the timing of being overtaken by the United Kingdom have been rare.

The weakening of Japan's economy is attributed to its declining population. The Yomiuri Shimbun analyzed, "India's real GDP growth rate will remain in the 6% range after 2026, and by 2029, it will surpass Germany to become the world's third-largest economy." The report also noted, "The United Kingdom has a population of about 69 million, roughly half that of Japan, but its population is expected to increase due to immigration. After 2026, the United Kingdom's real GDP growth rate is projected to be between 1.3% and 1.5%, exceeding Japan's 0.5% to 0.6%."

The Yomiuri Shimbun also analyzed that the weakening of the yen is contributing to the decline in Japan's economic standing. The yen/dollar exchange rate was below 120 yen in early 2022, but on this day, it was in the 150-yen range. A Japanese financial industry official told the media, "Since COVID-19, the yen has weakened, and when Japan's GDP is converted into dollars, it has decreased by about 30% relative to other countries," adding, "The real economy is also weakening compared to other nations."

In particular, Sanae Takaichi, the Liberal Democratic Party president and a leading candidate for Japan's next prime minister, is known to follow former Prime Minister Shinzo Abe's 'Abenomics,' which involved large-scale quantitative easing and increased fiscal spending. As a result, there are projections that the yen will continue to depreciate (with the yen exchange rate rising) in the future.