Decade of growth will make In­dia third-big­gest econ­omy

The Sunday Telegraph - Money & Business - - Business - By Tim Wal­lace

IN­DIA will be the fastest grow­ing big econ­omy of the next decade, leapfrog­ging the UK, Ger­many, France and Ja­pan to be­come the third big­gest in the world, ac­cord­ing to new fore­casts.

Economists at HSBC said the world’s largest democ­racy will grow at more than 6pc per year on aver­age over the com­ing decade. By con­trast growth in China is ex­pected to slow to below 5pc per year in the late 2020s.

In 2030 China’s GDP will be £26 tril­lion, ac­cord­ing to the fore­cast, putting it ahead of the US on £25.2 tril­lion.

In­dia will re­main a long way be­hind at $5.9 tril­lion, although this is al­most dou­ble its cur­rent $3 tril­lion econ­omy.

Canada is pre­dicted to drop out of the top 10 economies by 2030, while South Ko­rea will join the elite group.

The fore­cast sig­nals an ac­cel­er­a­tion in the rise of emerg­ing mar­kets.

Over the past decade, de­vel­op­ment in poorer parts of the world drove around half of global growth. Over the next decade, they will ac­count for around 70pc of global GDP growth, HSBC pre­dicts. Bangladesh, the Philip­pines, Pak­istan, Viet­nam and Ethiopia will join In­dia in the top six fastest­grow­ing economies.

Emerg­ing mar­kets have po­ten­tial to grow more quickly than rich economies be­cause they can “catch up” by adopt­ing new tech­nol­ogy, and bet­ter ed­u­ca­tion and health­care.

De­vel­oped economies have few such op­por­tu­ni­ties to jump ahead, and are also ham­pered by their age­ing pop­u­la­tions and legacy in­fra­struc­ture.

The work­ing age pop­u­la­tions are al­ready shrink­ing in coun­tries such as Italy and Ja­pan.

Nor­way and Aus­tralia will also suf­fer from this trend. Both are ex­pected to fall out of the top 30 economies by the year 2030.

“While poorer coun­tries with younger pop­u­la­tions will gen­er­ally see the sharpest moves up the rank­ings, other fac­tors mat­ter too,” said the re­port from economists Janet Henry and James Pomeroy.

“Im­prove­ments in ed­u­ca­tion, health­care and the rule of law can still see coun­tries with shrink­ing work­ing pop­u­la­tions hold their po­si­tion or even move up the rank­ings, no­tably Thai­land, Ser­bia and some of the other cen­tral and eastern Euro­pean coun­tries.”

Emerg­ing mar­kets can grow more quickly with new tech­nol­ogy, bet­ter ed­u­ca­tion and health­care

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