According to the IMF, Japan’s GDP is projected to fall to sixth place globally by 2027, overtaken by both India and the United Kingdom. This shift is attributed to the higher economic growth rates in India and the UK, as well as the persistent trend of a weaker yen against the US dollar.
Until 2010, Japan was the world’s second-largest economy, trailing only the United States. Now, over the course of little more than a decade, it is set to drop to sixth place—a decline in the literal sense of the word.

Since it was previously projected that Japan would be overtaken by the UK and fall to sixth place by 2029, the pace of this decline may be accelerating faster than anticipated.
It is often said that Japan now has an opportunity to break free from its long-standing deflationary structure and shift toward a growth trajectory—but is that truly the case? Looking at the GDP figures, it hardly seems so. A shrinking market due to population decline is frequently cited as a reason for Japan’s economic stagnation. While it is true that the United States, China, and India are all highly populous nations, consider Germany—the world’s third-largest economy—with a population of approximately 83.5 million, and the UK, with about 69.93 million. Both have smaller populations than Japan’s 122.65 million, and their market sizes are not particularly large either. Attributing Japan’s economic stagnation to population size is, therefore, somewhat unconvincing. Some also point to an aging society as a cause; Japan’s elderly population ratio stands at 29.6%, compared to 23.7% for Germany and just under 25% for the UK. While Japan’s figure is notably high, the differences are, frankly, marginal—hardly a compelling explanation for economic stagnation.

Of course, GDP is not an absolute metric. It can be boosted by disasters or accidents, and even by a deterioration in public safety. It is also easily manipulated by governments. Inflation, which causes hardship for the general public, can simultaneously push GDP figures upward. Conversely, the realization of an environmentally friendly, “eco-conscious” society could potentially drive GDP down.
In short, GDP is a metric that should be viewed with a degree of skepticism. That said, a country that held the number two spot as recently as a little over a decade ago falling all the way to sixth place surely points to some significant underlying issues. In my view, the primary causes are a national character strongly inclined toward frugality, combined with a concentration of wealth in the hands of a few—a situation that has broken the “economic cycle” necessary for money to circulate smoothly. (Kei Kitajima)

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