India’s impressive economic performance, coupled with strong growth projections for select Southeast Asian nations, is poised to serve as a significant catalyst for global economic expansion, according to insights from S&P Global.
During the annual energy APPEC conference, Rajiv Biswas, S&P Global’s Chief Economist for the Asia-Pacific region, underscored the pivotal role of the Asia-Pacific in driving global economic growth, both in the short term and the foreseeable future. He emphasized that over the next decade, the Asia-Pacific is expected to outpace other regions in terms of economic growth.
“When we look over the next decade, we do expect Asia-Pacific to be the fastest growing region of the world economy,” Biswas remarked. He specifically highlighted several bright spots in the region, including India, Indonesia, the Philippines, and Vietnam.
Biswas articulated, “A massive expansion is underway in the Indian economy, and there is also a very favorable outlook in Southeast Asia — where we anticipate robust growth, particularly in countries such as Indonesia, the Philippines, and Vietnam, which are poised to be among the world’s fastest-growing emerging markets in the coming decade.”
Vietnam, for instance, recorded a second-quarter GDP growth rate of 4.14%, outpacing the 3.28% growth rate observed in the first quarter. Meanwhile, Indonesia, Southeast Asia’s largest economy, expanded by 5.17% year-on-year in the June quarter. In contrast, the Philippine economy grew at a rate of 4.3%, slightly below Reuters’ expectations of a 6% increase.
India, on the other hand, experienced robust economic growth, with a remarkable 7.8% expansion in the June quarter, marking its fastest pace of growth in a year. Biswas expressed optimism about India’s economic momentum, affirming S&P Global’s forecast that India will surpass Japan to become the world’s third-largest economy by 2030. The projection envisions India’s GDP climbing from $3.5 trillion in 2022 to a substantial $7.3 trillion by 2030.
In the broader context of the Asia-Pacific region, S&P Global anticipates growth to strengthen from 3.3% in the previous year to 4.2% in the current year, according to their projections. Biswas further elucidated, “Over the next decade, we expect that about 55% of the total increase in the world’s GDP will come from the Asia-Pacific region.”
The Implications for the U.S. and China:
Despite the impressive growth trajectory of the Asia-Pacific region, Rajiv Biswas emphasized that the United States will continue to play a pivotal role in driving global economic growth, contributing to approximately 15% of the world’s growth over the next decade.
Likewise, China, despite experiencing a somewhat weaker recovery than anticipated and a slowdown in growth momentum, will remain a significant contributor to global economic expansion. China is expected to account for approximately one-third of the total increase in global GDP over the same period.
Biswas acknowledged that China has faced challenges, as a slew of economic data has fallen short of expectations. This has led to concerns about the sustainability of its growth trajectory.
In the broader global context, S&P Global’s outlook indicates that the global economy is poised for modest growth, with a projected growth rate of 2.5% for both the current year and the following year.
The Asia-Pacific region, led by India and select Southeast Asian economies, is expected to serve as a critical driver of global economic growth in the coming decade. While the United States and China will continue to play essential roles in this global economic landscape, the dynamism and growth potential of the Asia-Pacific region make it a focal point for economic opportunities and investment in the years ahead. S&P Global’s projections highlight the importance of monitoring these evolving economic dynamics for businesses and policymakers worldwide.
India’s consumer market set to become the world’s third largest by 2027, behind the U.S. and China
India’s consumer market is on track to become the world’s third-largest by 2027, driven by a rising number of middle to high-income households, according to a report from BMI. Currently ranking fifth globally, Fitch Solutions predicts that a substantial 29% increase in real household spending will propel India up two positions in the global consumer market hierarchy.
In fact, the report anticipates that India’s per capita household spending growth will outpace that of other developing Asian economies like Indonesia, the Philippines, and Thailand, with a year-on-year increase of 7.8%. This robust growth is expected to significantly widen the gap between total household spending in the ASEAN region and India.
BMI’s estimates suggest that India’s household spending will surpass the $3 trillion mark, driven by a compounded annual growth rate of 14.6% in disposable income until 2027. By this time, approximately 25.8% of Indian households are projected to reach an annual disposable income of $10,000 or more. BMI noted that a significant portion of these households will be concentrated in major economic centers like New Delhi, Mumbai, and Bengaluru, with wealthier households primarily located in urban areas, providing an attractive target market for retailers.
India’s substantial youth demographic is another key driver behind the anticipated surge in consumer spending. Approximately 33% of the country’s population falls within the age bracket of 20 to 33 years old. BMI expects this demographic to contribute significantly to the consumer electronics sector, with communication spending projected to grow at an average annual rate of 11.1% to reach $76.2 billion by 2027. This growth is attributed to a technology-savvy urban middle class with increasing disposable income, which encourages expenditure on aspirational products like consumer electronics.
Additionally, India’s ongoing urbanization process is expected to further bolster consumer spending. As more people move to urban areas, companies find it easier to access consumers and establish physical retail stores to cater to their needs. Major global brands like Apple and Samsung have already capitalized on this trend. Apple, for instance, opened two retail stores in Delhi and Mumbai in April, while Samsung announced plans to establish 15 premium experience stores across India by the end of the year, targeting major cities like Delhi, Mumbai, and Chennai.
Furthermore, BMI pointed out that global investors, including the Blackstone Group and APG Asset Management, have shown increased interest in India’s shopping mall business, recognizing the growth potential in consumer spending. They have injected additional investments into the country’s shopping mall sector to capitalize on the anticipated expansion in consumer spending.
India’s consumer market is poised for significant growth, with the country expected to climb to the third position in the global consumer market rankings by 2027. This ascent is attributed to the expected increase in real household spending, which will outpace other developing Asian economies, as well as the influence of India’s large youth population and ongoing urbanization. As global investors and major retailers continue to recognize this potential, India’s consumer market is becoming an increasingly attractive destination for business and investment.