The Centre for Economics and Business Research (CEBR) has predicted that India will regain sixth position from France next year and become the third-largest economy in 2031, a year later than previously predicted.
CEBR, one of the UK’s leading economics consultancies, in its annual World Economic League Table also predicted that China will overtake the US in 2030, two years later than forecast a year ago.
The London-based think tank said, over the next 15 years, India will see an improvement in its ranking in the World Economic League Table (WELT), rising from 7th place in 2021 to be the world’s third-largest economy in 2036.
India will again take over France to regain its 6th place in WELT ranking for 2022, which it briefly lost to France in 2021, the CEBR added.
The think tank said, the COVID-19 pandemic has been nothing short of devastating for the country. Indeed, India has the third highest death toll worldwide, ranking behind the US and Brazil.
Nonetheless, with the help of emergency aid and prompt responses from the Indian government, the country has been able to transition out of the second Covid-19 wave.
A large drop in daily active cases has also contributed to a sharp rebound in economic activity in 2021, following a GDP contraction of 7.3% in 2020.
The GDP in the second quarter of 2020 grew by 20.1% year-on-year amid a low base and despite the deadly second wave. This was followed by a slightly muted figure of 8.4% in Q3 2021, marking the fourth consecutive quarter of expansion.
Overall, the economy is estimated to have grown by 8.5% in 2021, with output in 2021 expected to be 0.6% above 2019 levels. The economic figures show an improvement after signs of slowing momentum in the economy before the pandemic, with the rate of GDP growth sinking to a more than ten-year low of 4.0% in 2019, down from 6.5% in 2018 and around half the 8.3% growth rate recorded in 2016.
The think tank warned that the recent discovery of the ‘Omicron’ variant, along with the possibility that it poses a higher reinfection risk and can evade vaccine protection, threatens India’s economic recovery.
The London-based think tank further said the world economy is set to surpass $100 trillion for the first time in 2022, two years earlier than previously forecast.
Global gross domestic product (GDP) will be lifted by the continued recovery from the pandemic, although if inflation persists it may be hard for policy makers to avoid tipping their economies back into recession, the economic consultant added.
“The important issue for the 2020s is how the world economies cope with inflation,” said Douglas McWilliams, the CEBR’s deputy chairman. “We hope that a relatively modest adjustment to the tiller will bring the non-transitory elements under control. If not, then the world will need to brace itself for a recession in 2023 or 2024.”