This US State Surpasses Japan To Become World’s Fourth Largest Economy

California’s economic strength lies in its diverse industrial base. It leads the United States in manufacturing and agricultural output, serves as the global epicenter of technology and innovation

The IMF recently downgraded Japan’s growth outlook, citing demographic challenges

Source : Pexels

California has officially overtaken Japan to become the world’s fourth-largest economy, according to newly released data from the International Monetary Fund (IMF) and the US Bureau of Economic Analysis. The Golden State’s gross domestic product (GDP) reached $4.10 trillion in 2024, edging past Japan’s $4.01 trillion, and now sits just behind the United States, China, and Germany on the global economic leaderboard.

Governor Gavin Newsom hailed the figures as proof of California’s economic leadership. “California isn't just keeping pace with the world - we're setting the pace,” he said, while acknowledging mounting concerns about the impact of federal trade policies on the state’s continued growth, according to The Guardian report.

California’s economic strength lies in its diverse industrial base. It leads the United States in manufacturing and agricultural output, serves as the global epicenter of technology and innovation, and hosts the world’s largest entertainment industry. Additionally, California is home to the country’s two busiest seaports, reinforcing its role as a vital hub for international trade, the report added.

Despite this economic milestone, Newsom warned that the state’s progress is at risk due to escalating trade tensions stemming from federal tariff measures. He has been a vocal critic of President Donald Trump’s trade policies, particularly the sweeping tariffs introduced in recent months. In response, Newsom has filed a legal challenge questioning the president’s authority to impose such levies.

Trade War Between China And The US

The Trump administration has implemented tariffs of up to 145 per cent on Chinese imports, prompting retaliatory measures from Beijing, which imposed duties of 125 per cent on American goods. When combined with existing tariffs, the total levy on some Chinese products now approaches 245 per cent. The administration maintains these actions are necessary to restore fair trade and bring manufacturing jobs back to the US.

IMF Outlook For Japan

The IMF recently downgraded Japan’s growth outlook, citing demographic challenges such as an ageing population and declining workforce. These structural issues, along with the broader effects of rising global tariffs, have contributed to Japan’s economic stagnation. The fund’s latest World Economic Outlook also noted that despite wage growth outpacing inflation, consumer spending has been dampened by the trade-related uncertainty.

Meanwhile, California not only surpassed Japan in total economic output but also posted the fastest growth among the world’s top economies. The state’s climb in the global rankings reinforces its position as a critical driver of both the national and international economy.

As the global economic landscape continues to shift, California's performance highlights the growing influence of subnational economies in shaping global trends.