Decade of growth will make India third-biggest economy
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