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By 2030, India will become the third biggest economy in the world. (Photo: Economist Times)

India to become the world's 3rd largest economy in 2030

India, which appears to have been pushed back to being the world's sixth-biggest economy in 2020, will again overtake the UK to become the fifth largest in 2025 and race to the third spot by 2030, a think tank said on Saturday. India had overtaken the UK in 2019 to become the fifth-largest economy in the world but has been relegated to the 6th spot in 2020.

The UK appears to have overtaken India again during 2020 as a result of the weakness of the rupee, it said. The CEBR forecasts that the Indian economy will expand by 9 percent in 2021 and by 7 percent in 2022. "Growth will naturally slow as India becomes more economically developed, with the annual GDP growth expected to sink to 5.8 percent in 2035," Economist Times quoted.

The report also forecasts that by 2030, India will become the third biggest economy in the world. Japan would remain the world's third-biggest economy, in dollar terms, until the early 2030s when it would be overtaken by India, pushing Germany down from fourth to fifth.

It said though Covid-19 delivered a major blow to the Indian economy, it was losing momentum due to the fragile banking system. (Photo: TOI)

"India has been knocked off course somewhat through the impact of the coronavirus 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 Centre for Economics and Business Research (CEBR) said in its annual report published on Saturday.

As stated by India today, when analyzing the impact of the Covid-19 pandemic, CEBR said the pandemic has been a human and an economic "catastrophe" for India, with more than 140,000 deaths recorded as of the middle of December.

"GDP in Q2 (April-June) 2020 was 23.9 percent below its 2019 level, indicating that nearly a quarter of the country's economic activity was wiped out by the drying up of global demand and the collapse of domestic demand that accompanied the series of strict national lockdowns," the think tank said in its report.

CEBR's estimate suggests India's GDP per capita in 2020 was 6,284 dollars, making it a lower-middle-income country. It said though Covid-19 delivered a major blow to the Indian economy, it was losing momentum due to the fragile banking system. "The rate of GDP growth sank to a more than 10-year low of 4.2% in 2019, down from 6.1% the previous year and around half the 8.3% growth rate in 2016", according to DNA India.

China will in 2028 overtake the US to become the world's biggest economy, five years earlier than previously estimated. (Photo: JOC)

China to overtake the US number 1 position 5 years earlier

Also in the mentioned report, the UK-based think tank forecast that China will in 2028 overtake the US to become the world's biggest economy, five years earlier than previously estimated due to the contrasting recoveries of the two countries from the COVID-19 pandemic.

In its annual league table of the growth prospects of 193 countries, the UK-based consultancy group said China had bounced back quickly from the effects of Covid-19 and would grow by 2% in 2020, as the one major global economy to expand. With the US expected to contract by 5% this year, China will narrow the gap with its biggest rival, the CEBR said. Overall, global gross domestic product is forecast to decline by 4.4% this year, in the biggest one-year fall since the second world war.

China’s share of global GDP has increased from 3.6% in 2000 to 17.8% in 2019 and will continue to grow. (Photo: Karawang)

Douglas McWilliams, the CEBR’s deputy chairman, said: “The big news in this forecast is the speed of growth of the Chinese economy. We expect it to become an upper-income economy during the current five-year plan period (2020-25). And we expect it to overtake the US a full five years earlier than we did a year ago. “Other Asian economies are also shooting up the league table. One lesson for western policymakers, who have performed relatively badly during the pandemic, is that they need to pay much more attention to what is happening in Asia rather than simply looking at each other", Guardian reported

China’s share of global GDP has increased from 3.6% in 2000 to 17.8% in 2019 and will continue to grow, the CEBR said. It would pass the per capita threshold of $12,536 (£9,215) to become a high-income country by 2023. Even so, living standards in China will remain much lower than in the US and western European countries. In the US, the average per capita income is just over $63,000, while in the UK it is just over $39,000.

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