India has managed to overtake United Kingdom in terms of the size of the economy - the first time after nearly 150 years, owing to Britain's recent Brexit-related problems and thanks to India's rapid economic growth. This dramatic shift has been driven by India's rapid economic growth over the past 25 years as well down slide in the value of the pound over the last 12 months, a report published in Forbes magazine said.
"Once expected to overtake the UK GDP in 2020, the surpassing has been accelerated by the nearly 20 per cent decline in the value of the pound over the last 12 months, consequently UK's 2016 GDP of GBP 1.87 trillion converts to $2.29 trillion at exchange rate of GBP 0.81 per $1, whereas India's GDP of INR 153 trillion converts to $2.30 trillion at exchange rate of INR 66.6 per $1," the report said.
Interestingly, economic think-tank Centre for Economics and Business Research (CEBR) had, in December 2011, forecasted that India would become the "fifth largest by 2020" but India has crossed this significant milestone much sooner.
"Furthermore, this gap is expected to widen as India grows at 6 to 8 per cent p.a. compared to UK's growth of 1 to 2 per cent p.a. until 2020, and likely beyond. Even if the currencies fluctuate that modify these figures to rough equality, the verdict is clear that India's economy has surpassed that of the UK based on future growth prospects," the report said.
Union Minister of State for Home Affairs Kiren Rijiju while celebrating India's landmark, said, "India overtakes UK & becomes 5th largest GDP after USA, China, Japan & Germany."
India remains fastest-growing large economy, beating China
Research and analysis division of The Economist Group, the Economist Intelligence Unit said India continues to be the fastest-growing large economy beating China, in its global economic outlook this month. Director of Global Forecasting at the EIU, Joseph Lake tweeted the highlights of the session saying, "India remains fastest-growing large economy, beating China. Iran looks good. Strong showing from Africa: Tanzania, Ghana, Kenya, Rwanda."
They, however, cut down India's economic growth forecast from 7.3 per cent to 6.5 per cent in 2016-17 because of cash shortage from "botched implementation of demonetisation". The group also warned that the health of the Chinese economy remains the biggest risk to the global economy, stating that "growth in China will lurch down from 6.2 per cent in 2017 to 4.2 per cent in 2018." "This kind of shift is unprecedented in modern China and will come at a time when the global economy is uniquely unprepared to react. Consequently, 2018 will be a year of anxiety around the world, characterised by volatility in real economies and financial markets."
The EIU warned that the collapse of the Chinese economy, which has become increasingly reliant on credit to sustain its rapid expansion, will have ripple effects around the world. "Worst-hit will be those countries that depend on exporting commodities to China, such as Australia, Chile, and Mongolia." Also directly affected will be countries that have deep and broad trading relationships with China, such as South Korea and Taiwan. "The rest of the world will feel a chill through declines in equity prices and in consumer and business confidence."
Lake sent out a series of tweets saying, "Iran looks good. Strong showing from Africa" Tanzania, Ghana, Kenya, Rwanda." "Venezuela from bad to worse (Maduro clings on till Dec election), UK +Italy weak spots in Europe, Syria a shameful situation for the world." "Brazil economy contracted by more than 7 per cent in 2015-16. We cut our 2017 growth forecast to 0.5 per cent following poor recent data. No bounce."
