California Becomes World’s Fourth-Biggest Economy, But India Poised to Overtake by 2026

LOS ANGELES — California has now cemented its position as the world’s fourth-largest economy, surpassing Japan, according to Governor Gavin Newsom, who highlighted the milestone as a testament to the state’s innovation-driven growth. However, the celebration may be short-lived — with the International Monetary Fund (IMF) projecting India will climb past California by 2026.

$4.1 Trillion Economy: A Global Powerhouse

In a statement released this week, Newsom announced that California’s nominal gross domestic product (GDP) surged to $4.1 trillion in 2024, narrowly beating Japan’s $4.02 trillion GDP. The ranking places California behind only:

1. The United States

2. China

3. Germany

“California isn’t just keeping pace with the world — we’re setting the pace,” said Governor Gavin Newsom, crediting the state’s progress to sustained investments in people, sustainability, and innovation.

Key Drivers of California’s Economic Strength

According to the Public Policy Institute of California, the state contributes roughly 14% to total U.S. GDP, with the following sectors leading its growth:

• Technology

• Finance

• Real estate

California’s population also saw a revival, increasing by approximately 250,000 people in the last year, driven by:

• A rebound in birth rates

• Gains from international migration

Despite this growth, the total population remains below pre-pandemic levels.

Tariff Tensions and Economic Risks

Governor Newsom’s announcement also comes amid rising concerns about the impact of Trump-era tariff policies. In a direct challenge to the federal administration, Newsom last week filed a lawsuit against the White House, accusing President Donald Trump of overstepping constitutional authority by implementing tariff hikes without Congressional approval.

“While we celebrate this success, we recognise that our progress is threatened by the reckless tariff policies of the current federal administration,” Newsom stated. “California’s economy powers the nation, and it must be protected.”

Newsom — widely seen as a potential Democratic presidential contender in 2028 — has pledged to negotiate directly with international leaders to shield California-based industries from retaliatory tariffs.

Global Growth Outlook Dims

The IMF’s latest World Economic Outlook report offers a sobering backdrop to California’s achievement. The global financial body:

• Cut its 2025 global growth forecast to 2.8%, down from 3.3% in January.

• Slashed the U.S. GDP growth forecast to 1.8%, nearly one percentage point lower than earlier estimates.

• Warned that global economic conditions could worsen due to prolonged tariff wars.

India on Track to Surpass California by 2026

While California’s economic rise is a milestone, it may not hold the fourth spot for long. The IMF projects that India, currently the fifth-largest economy, is poised to overtake California by 2026 as it continues its rapid growth trajectory.

India's surging industrial output, tech exports, and consumer-driven economy are powering it toward global economic dominance. The projection underscores a shifting global economic order, where emerging markets are beginning to challenge developed economies in both size and influence.

Conclusion: Celebration with Caution

Governor Newsom’s declaration reflects California’s economic strength, resilience, and its strategic importance to the U.S. However, the growing risks of federal trade policies, shifting global dynamics, and competitive emerging markets like India present significant challenges ahead.

As global economies continue to recalibrate post-pandemic, California’s leadership will likely face pressure to innovate, diversify, and diplomatically shield its industries to maintain its economic stature on the world stage.