NEW DELHI: India will regain its position as the fifth-largest economy by 2025 and emerge as the third-largest by 2030 in dollar terms and remain in that position until 2035 while China is now forecast to overtake the US economy in 2028, five years earlier than in 2033 as previously forecast, a top economic research firm has estimated.
The latest World Economic League Table 2021 published by the Centre for Economics and Business Research (CEBR) which has forecasts for 193 countries up to 2035 said the working of the table has been done due to the impact of the Covid-19 pandemic on global economies.
“While virtually all countries have been affected by the pandemic, one of its impacts has been to redistribute economic momentum between countries with Asia doing best and Europe worst,” CEBR said in its report, estimating that the pandemic has had a $6 trillion GDP cost in 2020.
“India has been knocked off course somewhat through the impact of the pandemic. As a result, after overtaking the UK in 2019, the UK overtakes India again in this year’s forecasts and stays ahead till 2024 before India takes over again,” the report said.
According to the IMF, India emerged as the fifth largest economy in 2019, ahead of the UK and France.
The Indian economy, Asia’s third-largest has been hit hard by one the strictest lockdowns in the world imposed to ward off the spread of the deadly Covid-19 infection. As economic activity stalled, the economy contracted by a record 23.9% in the June quarter. This was among the sharpest contractions among major and G-20 economies. But the lifting of the lockdown since June and easing of curbs has led to a sharp recovery and the contraction has narrowed to 7.5% in the September quarter. The Reserve Bank of India (RBI) now estimates the economy to return to positive territory by the third quarter of the current fiscal year that ends in March. The economy is forecast to record robust growth in 2021-22 due to the low base and the pace of recovery, which is seen sustained on the back of measures unleashed by the government and the central bank.
The bruising impact of the economy has also meant that India will have to wait to achieve its target of emerging as a $5 trillion economy by 2024. Economists say it will take a few years before India’s economy returns to the 7%-8% growth trajectory.
“We estimate that world GDP will fall by at least 4.0% this year, clearly with a huge margin of error. If this is correct, the fall will be more than twice as large as in 2009 during the financial crisis and will be the largest drop in GDP in one year since 1931 other than in years affected by war,” the CEBR said in its report
“Provided that both fiscal and monetary action are taken on the extensive scale promised, there should be a sharp economic recovery in 2021 with world GDP growth of 3.4% although it will be 2022 before world GDP overtakes the 2019 level,” the report added.