India Shines Bright: Set to Climb to 3rd Place in the World Economy by 2030
In the world of global economics, September witnessed another month of stagnation in growth across the globe. Yet, amid this backdrop of economic uncertainty, India emerged as a beacon of resilience, showcasing robust expansion, marking one of its strongest growth rates in nearly 13 years.
A recent report by S&P Global Market Intelligence highlights this remarkable achievement, especially as private sector output in developed markets, encompassing both manufacturing and services, faced a slight contraction.
The Asia Credit Outlook 2023, a publication from S&P Global Market Intelligence, forecasts that India is on track to become the world’s third-largest economy by 2030, surpassing economic giants like Japan and Germany. According to the report, India’s Gross Domestic Product (GDP) is projected to reach an impressive USD 7.3 trillion by 2030.
As of the latest available data, India stands as the world’s 5th largest economy with a GDP worth USD 3.7 trillion in the 2023-24 period. This achievement follows India’s ascent to the position of the 5th largest economy in the world, overtaking the United Kingdom in 2022.
S&P Global Market Intelligence’s report underscores India’s economic strength, reaffirming its position as a front-runner among major emerging economies, showcasing exceptional growth momentum. A significant factor in India’s performance is its ability to accelerate economic growth from August, with output expansion reaching a level not seen in almost 13 years. The Indian economy displayed remarkable resilience and sustained growth throughout the 2023 calendar year.
The expansion of India’s economy was further amplified by a substantial increase in new businesses, fueled by favorable demand conditions and positive market dynamics. Both the manufacturing sector and the services industry played vital roles in driving India’s impressive growth trajectory.
In contrast, other major emerging economies, such as Russia and China, experienced more modest growth and even a slowdown in growth compared to the preceding months.
One interesting aspect the report highlights is that price pressures slightly eased for firms in emerging markets due to milder service sector cost inflation. However, these firms still managed to pass on their higher costs to consumers at an accelerated rate. This, in turn, resulted in the highest level of selling price inflation for emerging markets in 14 months, offering optimism for businesses’ profitability.
In developed markets, the scenario was quite different, with profit margins facing pressure due to a faster rate of input cost increases. Even though selling price inflation dipped in September, it continued to rise significantly, far above the long-term average. This was a unique situation where higher prices did not significantly impact client demand, despite the presence of high-interest rates and a global economic environment showing signs of softening.
India’s persistent growth serves as a clear distinction between emerging and developed markets, underscoring the challenges and opportunities presented by the ever-evolving global economic landscape. As India continues to thrive and expand its economy, it not only marks a remarkable achievement for the nation but also showcases the potential for other emerging economies to make their mark on the world stage. With the forecasted trajectory, India is on track to emerge as a global economic giant, potentially securing its position as the world’s third-largest economy by 2030.