New Delhi [India], July 14 : India is on track to become the world's fourth-largest economy in 2025, surpassing Japan, marking a significant shift in Asia's economic balance, according to the latest Rubix Country Insights Report: Japan by Rubix Data Sciences.
According to the report, the United States is preparing to impose 25 per cent tariffs on Japanese exports starting August 1, Japan faces mounting economic pressures that threaten to further dampen growth, said a recent report by Rubix.
Additionally, the reports reveal that Japan's economy, once a pillar of regional strength, grew just 0.1 per cent in 2024. Weak household spending, surging import costs, and persistent inflation at 3.7 per cent have weighed on the recovery.
The Bank of Japan has cautiously raised interest rates, but looming US tariffs, expected to reduce GDP growth by 0.26 percentage points and slash exporter profits by up to 25 per cent, pose a serious threat, particularly to Japan's vital automotive sector.
Despite these headwinds, Japan's corporate sector is showing resilience. M&A activity reached a four-decade high in 2024, with deals exceeding USD 230 billiona 44% jump. Major transactions like Nippon Steel's acquisition of U.S. Steel and Bain Capital's healthcare investments underscore Japanese firms' drive for global expansion.
In parallel, India's GDP is projected to edge past Japan's in 2025, reaching USD 4,187 billion.
Furthermore, the Rubix report believes this is a deepening partnership. Bilateral trade has grown at a 13% CAGR to exceed USD 25 billion in FY2025, though India's trade deficit with Japan has nearly doubled.
Automobiles now account for 13% of India's exports to Japan, up from just 1 per cent four years ago, signalling India's emergence as a key supplier. Japanese imports from India have grown steadily, while investments in India's manufacturing, clean energy, and infrastructure sectors are rising rapidly.
Beyond trade, the two nations are collaborating on semiconductors, defence, and digital infrastructure.
"The world's fourth- and fifth-largest economies deepening their trade and strategic ties augurs well for Asia's economic future. Our report shows how this partnership is unlocking concrete business opportunities, from rising Indian exports of automobiles and smartphones to Japan to record Japanese investments in India's manufacturing, energy, and infrastructure sectors," said Mohan Ramaswamy, CEO of Rubix Data Sciences.
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