India's Rise to Prominence
Authors & Contributors
India’s economy is now the fourth largest economy in terms of nominal GDP and is expected to double its output every 11 years.
In a world of constant breaking news, India’s economy has gone under the radar and is now the world’s fourth largest economy in terms of expected nominal Gross Domestic Product (GDP) in 2025, according to the International Monetary Fund's (IMF’s) recent World Economic Outlook. India also ranked third in purchasing power terms as Indian goods and services are relatively inexpensive.
India is expected to continue growing quickly with a real-trend growth rate of 6.5% being the second fastest in the IMF's sample of 196 countries, a pace that doubles output every 11 years. Strong demographics underpin that trajectory, with India’s massive and relatively young population of over 1.4 billion people fueling growth. By the end of this decade, the IMF projects India’s economy to have surpassed both Japan and Germany in size. The two economic giants of the 20th century are growing much slower, with trend growth rates below 1%. China, the world’s second largest economy, maintains a 3.4% trend growth rate, which is less than half the pace of the past few decades as the country grapples with a shrinking population and a rebalancing of investment and consumption.
Evolution of the 10 largest economies
Global rank of nominal GDP in US dollars by year
As of mid-May, the US administration’s steep 30% tariffs on China suggest it wants to rebalance trade and rely less on their imports. However, India could be a good substitute for the US and gain ample trading opportunities. Relocating supply chains may take time, but there are signs of increased investment from large companies. For instance, a tech company recently suggested plans to shift the assembly of all of its US-sold cell phones to India by next year.
Finally, India’s rapid economic growth is reflected in its expanded presence in global benchmarks. Its share of the MSCI Emerging Markets Index has more than doubled since 2019, reaching 18.5% as of the first quarter of 2025, making it the third largest weight after China and Taiwan. As India’s economy continues to climb the ranks, it may feature as an increasingly vital component of global investment portfolios.
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