India Climbs to the World’s Fourth-Largest Economy: Growth Stays Broad-Based, Inflation Eases
Bolstered by resilient domestic demand, investment momentum, and ongoing reforms, India’s nominal GDP has edged past Japan, placing the country as the world’s fourth-largest economy at approximately $4.18 trillion in late 2025, according to government statements referencing IMF estimates. The growth story is reinforced by 8.2% real GDP expansion in Q2 FY 2025–26, up from 7.8% in Q1, with broad-based improvements across industry and services. Notably, consumer price inflation cooled through the year—hitting ~0.71% in November—creating room for stable monetary policy and supporting real incomes during the festive quarter.
The year also saw progress on trade: new or advanced FTAs with partners such as the UK, EFTA, New Zealand, and Oman added external momentum, even as US tariffs complicated export dynamics. Multilateral assessments from the IMF and World Bank continued to characterize India as a fast-growing major economy, with structural reforms—labor, logistics, manufacturing incentives, and FDI facilitation—shoring up medium-term prospects. The government’s year-end review emphasized strong exports, improved labor-market metrics, and sturdy foreign-exchange buffers, pointing to 2026’s challenge: sustaining growth while deepening market access and investment inflows in an uncertain global environment.
Key numbers at a glance (as of late 2025):
- Nominal GDP: ~$4.18 trillion (IMF estimates; surpassing Japan)
- Real GDP Growth: 8.2% in Q2 FY25–26; prior quarter 7.8%
- CPI Inflation: ~0.71% in Nov 2025 (benign price trends)
