The movements at the top of the global economy have occurred without interruption in recent times. Although the US, according to the recent IMF review, continues to maintain world supremacy in terms of GDP size, which reached 30.3 trillion dollars at the end of 2024 at current market prices, and China has positioned itself as the second superpower with its 19 .5 billion, the fight of his immediate pursuers is fierce. So much so that India has taken to climbing positions at an unusual speed. If in 2023 it surpasses the United Kingdom, in 2025 it will surpass Japan, which, for almost 40 years, was the dominant market in the business cycles of the Asian continent.
China already did it in 2010 on the GDP of the country of the Rising Sun. Now, India will do it, which plays its geostrategic cards to rival Beijing and Tokyo as a leading regional – and global – power on a diplomatic board that will be shaken this year by several earthquakes. Among others, the return of Donald Trump and his more radical 2.0 version, better armed and with clear signs of revenge for his first stay in the White House; the competitive race for the world technological scepter without the most basic rules of the game and, of course, the real and latent geopolitical risks.
But beyond the dangers of a return to protectionism, new diplomatic alliances or unsolved mysteries such as the advances of Artificial Intelligence (AI) or the more than possible future epidemics, certain certainties appear on the horizon. India will be the second largest economy in Asia and the fourth largest on the planet. Its GDP will almost exceed five trillion dollars before the end of this decade – in 2028 – and its exports of goods and services will reach one trillion dollars in 2030.
Quite a feat that adds up to another double surprisethe one starring China to acquire the status of the most populated country on the planet, in 2022, and the Hong Kong Stock Exchange, for the largest volume of capitalization -4.33 trillion capitalization, similar to the size of Japan’s economy -, from the National Stock Exchange (NSE) of Mumbai, in 2024. In the meantime, in 2023, it snatched fifth place from the United Kingdom in the ranking of the planet’s GDP.
The geopolitical tensions between the US and China “have transferred capital massively from its Asian neighbor to India and built a stable investment and manufacturing haven” with the approval of its prime minister, the nationalist Narendra Mori who, in the eyes of more and more Western allies, serves as a counterpoint to Xi Jinping’s regime, says market research firm Canalys, from where they emphasize that “Apple will manufacture a fifth of its iPhones in India by the end of this year.”
These are just several examples of the turmoil revealed by the architecture of globalization, which the Trump Administration will subject, in any case, to a profound review of damages and effects that are difficult to qualify and quantify. All, with India as the protagonist. Although they are not the only ones. Because, for example, Japan, which has been labeled as a global economic sufferer for more than two decades due to its persistent stagnation of activity with a propensity for price deflation, has gone from representing 8% of global GDP in 2010 to less 4% in 2024.
Emerging markets gain global muscle
This transfer of economic muscle from the industrialized powers to large emerging markets is evident when viewing the size of the thirteen economies that follow the US and China in the ranking. With Germany in recession – and a GDP of 4.9 billion – the dynamic Indian activity would climb to the podium before 2028; Both would make up, along with Japan, another select club, that of 4 billion dollars. Below, with more than 3, are currently the duo of old European powers: the United Kingdom (3.7) and France (3.2). Both are in the doldrums after the Great Pandemic.
All of them precede a large group that evolves with a productive gap that slightly exceeds half a trillion dollars and ranges from 2.4 trillion in Italy (eighth global economy) to 1.81 in the fifteenth, Mexico, which precedes to Spain (1.82). In the middle and in descending order appear Canada, Brazil and Russia and, without touching the threshold of 2 billion, South Korea and Australia.
But India has an unused weapon, that of a large female population that still accounts for a small share of its labor market, despite the social changes – timid and without much intensity – that the Government of Delhi has undertaken. In fact, its workforce only represents three quarters of that operating in China. So the predictions of multilateral institutions such as the OECD predict that the surprise of the Indian active population over the Chinese one will not be consummated before the middle of the century.
However, the inclusion of gender equality dynamics in the labor circuit would leave behind the official objective of reaching 3% of global exports in 2030, with a bill of 1 trillion dollars from its foreign sector. Citigroup analysts remember that South Korea already achieved that level and that check ten years ago, without as many options as India to become the new world factory. In his opinion, sales to other markets in Delhi could exceed 6% in the next 6 years, given the growing influx of multinationals and demands for technical and professional jobs.
India’s rise to fourth place in the world ranking in 2025 is two years ahead of the predictions at the beginning of the post-Covid cycle and relegates another place to Japan, which lost third place in 2023 to Germany. The IMF anticipates a GDP of 4.34 trillion for India – the same figure as the capitalization value of the Mumbai NSE – and 4.31 trillion for Japan at the end of 2025. Although both G-7 economies support low levels of growth in the last two years, with episodes of recession, in the German case, and contraction in the Japanese GDP. In contrast, India is the only GDP among the G-20 partners – of the great high-income powers and emerging markets – that flirts with annual dynamisms close to double digits. It rose 7.8% in 2023.
The Indian drive has been based, above all, on strong domestic demand; especially, in the area of consumption, with 1.4 billion potential customers in a market that increases its annual spending rates on steel, cement and automobile manufacturing by double digits and that preferentially uses the rupee with 27 countries, to the detriment of the dollar. . Largely, due to the more than 134 billion online payment accounts that carry out 46% of global digital transactions, explains Marcel Thieliant, head of Asia-Pacific at Capital Economics, one of the economists who predicts the surprise Indian over Japan this year.
Japanese revival, Chinese challenges and Indian emergency
Although demographic explanations also arise. By 2027, China “will have lost 8 million citizens, while India will host another 75 million and will outpace Chinese GDP by more than 2 points by then.” In contrast to the 1.5% that, on an annual average, the second global economy exceeded Indian activity during the past decade, clarifies the consulting firm Focus Economics. Due to three factors: on the one hand, due to the decline and demographic aging of China compared to the relatively young society of its Asian rival; on the other, due to India’s lower per capita income, which generates more dynamism than middle-income economies and, thirdly, due to the growing corporate and international isolationism towards China.
In a recent debate at the Institute for Management Development (IMD), several analysts including Yumiko Murakami of MPower Partners Fund and Alicia García Herrero, chief Asia-Pacific economist at Nataxis, agreed that the most populous continent and with greater commercial vigor, “has entered a favorable economic dynamic” in which Japan “seems to have revitalized its well-being and prosperity,” China “faces new” geopolitical and economic challenges, and India “emerges as another alternative to leadership.” regional”.
Murakami attributes Japan’s “resuscitation” to its demographic contraction and the technological boom in a period of certain economic pulse with lukewarm signs of consumer spending in digital ecosystems that have put companies and government on the same wavelength: appealing to immigration for the manufacturing workforce and attract qualified talent to fill professional vacancies from abroad.
Herrero, for his part, showed a pessimistic side of China. It has fallen into the trap of deflation – he explained – with which Japan has suffered so much, although the Asian giant “is heading towards a budget deficit of 12%, which the Japanese economy did not even come close to, while its external weight “It suffers in markets such as the US, the preferred destination of Japan, South Korea and a large part of the Asean partners in 2024.” The geopolitical tension and the slowdown in the pace of its GDP can lead the second economy on the planet “to grow around 1% in 2035.”
On the other hand, for Garima Mohan, a researcher in the Indo-Pacific program of the German Marshall Fund, “India is the market of opportunities” with an increasingly well-prepared workforce, unparalleled technological progress in an economy with a notable burden of inequality. behind them, but with a strategic vision to attract direct foreign investments and to place manufactures and merchandise abroad that have promoted business development, although above all industrial, in areas such as electronics, the pharmaceutical sector or automobile brands, which It contributes more than 13% to the country’s GDP.
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