India Set to Overtake Japan as World’s Third Largest Economy

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Sept. 20 – With Japan’s economy in the doldrums and expected to shrink following the devastating earthquake and tsunami that hit the country earlier this year, India’s 8 percent growth is likely to see it emerge as the world’s third largest economy this year, in purchasing power parity terms.

India currently ranks fourth, with 2010 International Monetary Fund data showing that the Japanese economy was worth about US$4.31 trillion, with India close behind at US$4.06 trillion.

However, India’s rapid growth – which has already overtaken China as the world’s fastest growing major economy – is expected to overtake Japan this year. The impact of the tsunami upon Japan has brought forward India’s rise to third position. Had this horrible natural disaster not occurred, India’s overtaking would likely not have happened until 2013-14.

The IMF has indicated that the Japanese economy is expected to contract by 0.7 percent this year, while India is on target to meet 8.2 percent growth.

Dezan Shira & Associates is boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in India. To contact the firm, please email india@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.

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