Washington, DC: Not long ago, India was considered among the underdeveloped and sometimes a developing Third World Nation. The new path India took with the modernization of its economy in 1990s has taken India to new heights and today, it is ranked among the largest of economies among the nations of the world. India continues to be on the growth path, making sustainable development in almost all areas. And if the current trend continues, in the world 15 years from now, India will be the third largest economy in the next 15 years from now. India, ranked eighth in 2015, will climb past Brazil, the United Kingdom, France, Germany and Japan to take third place in the world ranking.
The International Monetary Fund calls India “the bright spot in the global landscape.” The country will have the largest workforce in the world within the next 15 years, the IMF notes, and among the youngest. Despite all the glow around India’s growth, it is notable that India still has nearly 300 million of its population below poverty line, which is in contrast with the growth path by many other developing nations.
According to the US Department of Agriculture’s latest macroeconomic projections that go out to 2030, the US will be far less dominant, several emerging markets will catapult into prominence, and some of the largest European economies will be slipping behind. The US will just barely remain the global leader, with $24.8 trillion in annual output the country, worth 25 % of the world economy in 2006 and 23% in 2015, will see its share decline to 20%.
China’s GDP will grow to more than twice its size today, helping the Asian powerhouse to almost entirely close its gap with the US. India will be followed by Japan in fourth place, then Germany, and Brazil at number six.
According to the same report, some of the other nations won’t be so lucky, particularly among developed economies. Japan, which was a roaring economy until its asset bubble burst in the early 1990s, has already slogged through decades of stagnation and will likely continue to see very little growth over the next 15 years. That will push Japan down a spot in the rankings by 2030, according to the USDA estimates.
Japan is “an important lesson in how quickly you can downshift your status of what a structure of an economy delivers,” said Bruce Kasman, JPMorgan’s chief economist. In the overall ranking, Jamaica will surrender the most ground, bumping down 13 places to 136. Countries with the biggest advances — like Uganda, which will climb 18 spots to rank 91 — are concentrated in Africa, Asia and the Middle East. It’s important to take estimates stretching out so far with a note of caution, though.
“There are lots of uncertainties,” said Kasman. “Whether China grows at 4% or 6% matters an awful lot for where it looks like it’s going to be in the global economy. Whether India grows at 3% or 8% — these are huge differences when you compound them over long periods of time.
Meanwhile, Moody’s has raised India’s credit rating outlook to positive from stable, marking a robust endorsement of policy initiatives by the Narendra Modi government aimed at reviving growth and putting it ahead of other economies. Rival rating agency Fitch was more circumspect, praising the reform initiatives but leaving the outlook unchanged. The rating upgrade could be possible in the next 12-18 months, Moody’s said. Fitch will wait to see the growth impact that the economic changes have once they are fully implemented. The three big rating agencies — Standard & Poor’s, Moody’s and Fitch — have India at the lowest investment grade, just a notch above ‘junk’ status. “The upgrade in outlook is significant but we’ve to do more,” Finance Minister Arun Jaitley tweeted after Moody’s raised the outlook and affirmed its Baa3 rating.
“India has grown faster than many other peers over the last decade and the actions of the policymakers should further boost the country’s economic and financial strength in coming years,” Moody’s said in a statement. “The ability of policymakers to strengthen India’s sovereign credit profile to a level consistent with a higher rating will become apparent over the next 12-18 months.” Fitch said the Modi government’s program is bringing about a change in sentiment. This had turned gloomy in the final years of the previous United Progressive Alliance government as growth slumped to decadal lows and projects got stalled.