The surging Indian economy will overtake the UK and France during the course of 2018 to become the fifth largest in the world, according to forecasts published today.
Continued booming growth in India will contribute towards a rapid reorientation of the world’s economy towards Asia over the next 15 years, according to the research by the Centre for Economics and Business Research (CEBR).
Indian GDP, at $2.26 trillion (£1.69) is the world’s seventh biggest in dollar terms, the standard measure of an economy’s size, according to World Bank data for 2016. Meanwhile the UK’s GDP is $2.65 trillion and France’s $2.47 trillion.
The Indian economy grew at an annual rate of 6.3 per cent in the third quarter, picking up pace again after a dip to 5.7 per cent in the second quarter thought by some economists to show the ongoing impact of demonetisation and the introduction of the goods and services tax as Prime Minister Narendra Modi attempts to modernise the economy.
Oliver Kolodseike, CEBR senior economist, said: “The interesting trend emerging is that by 2032 five of the 10 largest economies will be in Asia, while European economies are falling down the ranking and the USA loses its top spot.”
By 2032 three out of the world’s four largest economies will be Asian, as India joins China and Japan, while Korea and Indonesia will enter the world’s top 10, CEBR predicts. Taiwan, Thailand, the Philippines and Pakistan are also predicted to enter the world’s top 25 economies by that time.
Asian economies are in the midst of breakneck development as they make large leaps thanks to the rapid uptake of technology and a heady pace of urbanisation. The largest Asian countries are currently undertaking massive infrastructure projects which are expected to continue the growth boost, with China’s Belt and Road programme in particular thought to be the biggest batch of infrastructure investment in human history.
Graham Robinson, a consultant at law firm Pinsent Masons and director of Global Construction Perspectives, a sponsor of the report, said: “Construction’s share of world GDP is to reach its highest level ever, driven by ultra-large global transformational projects. The Chinese Belt and Road initiative and the Indian infrastructural project will boost construction’s share of world GDP to 15 per cent by 2032, probably the highest share of world GDP construction has seen since the pyramids or Great Wall of China were built.”
At the top of the table China is expected to overtake the USA to become the world’s largest dollar economy in 2030. China is already the world’s largest economy on a purchasing power parity basis, a different measure of economic muscle which takes into account the amount citizens can purchase in their own nation. However, the lower-than-expected negative impact of President Donald Trump on trade means the USA will retain its global crown a year longer than anticipated in the last report.