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India probably world's 3rd largest economy: OECD

business Updated: May 29, 2013 21:12 IST

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India has probably surpassed Japan to become the world's third largest economy after the US and China, Paris-based think-tank OECD said today even as it lowered the country's economic growth projection for 2013 to 5.3%.

"China will likely pass the United States as the world's largest economy in the next few years and India has probably recently surpassed Japan to be third largest," said the OECD Economic Outlook report.

Until around 2020, China is set to have the highest growth rate among major countries, but could be then surpassed by India, it further said.

OECD also said that by early 2030s, the BRIICS' (Brazil, Russia, India, Indonesia, China and South Africa) combined GDP should roughly equal that of the OECD (based on current membership), compared with just over half that of OECD now.

"Between now and 2060, GDP per capita is seen to increase more than 8-fold in India and 6-fold in Indonesia and China," it added.

The Organisation for Economic Cooperation and Development (OECD), which in November had projected India to grow at 5.9% in 2013, cautioned that structural bottlenecks in the country could further constrain investment and growth potential.

"GDP growth is projected to rise gradually over the next two years... Significantly more growth would be forthcoming if structural bottlenecks were swept away by fundamental structural reforms," the report said.

Looking ahead, it said India is likely to improve growth to 6.7% next year, after having logged a decade's low of 3.8% in 2012.

OECD said the world real GDP is projected to increase by 3.1% this year and by 4% in 2014. Across OECD countries, GDP is projected to rise by 1.2% this year improve to 2.3% in 2014. Growth in non-OECD countries will rise by 5.5% this year and 6.2% in 2014.

In the US, activity is projected to rise by 1.9% this year and by a further 2.8% in 2014, OECD said.

GDP in the euro area is expected to decline by 0.6% this year and then rebound by 1.1% in 2014.

Japan's GDP is expected to grow by 1.6% in 2013 and 1.4% in 2014, it added.