SACRAMENTO, Calif. (Diya TV) — 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 U.S. Bureau of Economic Analysis (BEA). With a nominal gross domestic product (GDP) of $4.1 trillion, the Golden State now ranks behind only the United States ($29.18 trillion), China ($18.74 trillion), and Germany ($4.65 trillion).
Governor Gavin Newsom announced the milestone this week, describing it as a testament to California’s diverse and resilient economy. “California isn’t just keeping pace with the world — we’re setting the pace,” Newsom said. “Our economy is thriving because we invest in people, prioritize sustainability, and believe in the power of innovation.”
According to Newsom’s office and IMF figures, California’s economy grew by 6% in 2024, outpacing the national rate of 5.3% and significantly exceeding growth in China (2.6%) and Germany (2.9%). Over the past four years, California has averaged a nominal GDP growth rate of 7.5%, demonstrating consistent expansion despite global volatility.
The state’s economic success is rooted in its robust mix of industries, including technology, agriculture, entertainment, green energy, and advanced manufacturing. California also benefits from being a magnet for venture capital investment, new business formation, and international tourism. According to Newsom’s office, the state engaged in $675 billion in two-way trade last year.
However, California’s economic climb comes amid growing tension over U.S. trade policy. Newsom recently filed a lawsuit challenging former President Donald Trump’s use of the International Emergency Economic Powers Act to impose tariffs without congressional approval. He argued that these tariffs threaten billions in state revenue and damage international partnerships critical to California’s economy.
“While we celebrate this success, we recognize that our progress is threatened by the reckless tariff policies of the current federal administration,” Newsom said. “California’s economy powers the nation, and it must be protected.”
California’s rise is not without critics. Some argue the state’s new global standing masks deeper, unresolved issues. California continues to grapple with a high cost of living, housing shortages, unemployment disparities, and strained infrastructure. Additionally, economic analysts point out that Japan’s recent stagnation may have contributed more to the shift in rankings than California’s acceleration alone.
Still, economists view California’s diverse economic foundation as a major advantage. The state’s leadership in clean technology, film and entertainment, software development, and agriculture positions it for continued competitiveness on the global stage.
This isn’t the first time California has climbed the global economic ladder. In 2018, the state surpassed the United Kingdom to become the world’s fifth-largest economy. Yet, its reign in fourth place may be brief. Current projections indicate India, with a GDP of $3.9 trillion and rapidly accelerating growth, could surpass California by 2026.
