India will outpace the United States to emerge as the second largest economy in purchasing power parity (PPP) terms by 2040, global management consultant PricewaterhouseCoopers has forecast in a report.
India’s GDP growth is estimated to have slowed to 7.1% in 2016-17 from 7.9% in 2015-16 after the government decision to scrap Rs 15.44 lakh crore worth of high denomination notes or 86% of currencies in circulation. However, analysts expect the economy to bounce back from 2017-18 on rising consumer demand.
By 2040, India’s gross domestic product in PPP terms will grow to $30 trillion from $8.7 trillion in 2016, while US will grow from $18.6 trillion to $28.3 trillion, said the PwC report titled “The World in 2050”.
China will continue to lead the chart with its GDP rising from $21.3 trillion to $47.4 trillion by 2040.
By 2050, China’s GDP in PPP terms will touch $58.5 trillion followed by India ($44.1 trillion) and the US ($34.1 trillion).
However, India’s GDP measured in terms of dollar will grow to $28 trillion to emerge as third biggest by 2050, after China ($49.9 trillion) and the US ($34.1 trillion). In 2016, India’s GDP size was just $2.3 trillion, a fraction of China‘s $11.4 trillion and $18.6 trillion of the US.
The seven leading emerging economies (E7)—China, India, Russia, Brazil, Indonesia and Mexico—will surplus the seven leading developed nations that includes the United States, United Kingdom, Germany, Japan and France, PwC said.
“The world economy could more than double in size by 2050, far outstripping population growth, due to continued technology-driven productivity improvements. Emerging markets (E7) could grow around twice as fast as advanced economies (G7) on average,” it said.
As a result, six of the seven largest economies in the world are projected to be emerging economies in 2050 led by China, India and Indonesia.
The US could be down to third place in the global GDP rankings while the EU27’s share of world GDP could fall below 10% by 2050.
UK could be down to 10th place by 2050 while France out of the top 10 and Italy out of the top 20 as they are overtaken by faster growing emerging economies like Mexico, Turkey and Vietnam respectively, PwC said.
But emerging economies need to enhance their institutions and their infrastructure significantly if they are to realise their long-term growth potential, it added.