India can withstand an impending global recession

At six per cent to seven per cent growth in the next 2023-24 fiscal, the Indian economy can comfortably withstand an impending global recession that could hit most other major economies, economists and analysts said.

Rajiv Kumar, Niti Aayog’s former vice-chairman, said there is a synchronised downturn in the US, Europe, Japan, and also in China and that could take the global economy into a recession in the coming months.

“The good thing is that there are no such fears of a slowdown in India, as even though our growth may be negatively impacted by global conditions, we can expect a rate hike of six per cent to seven per cent in 2023-24,” he said.

Amid widespread gloomy signs of the looming recession, the International Monetary Fund’s chief Kristalina Georgieva warned that the global economy is moving from a world of relative predictability to one of greater uncertainty.

The fund said that colliding pressures from inflation, war-driven energy and food crises and higher interest rates were pushing the world to the brink of recession. Cutting its 2023 global growth forecasts further, the IMF said in its World Economic Outlook that countries representing a third of world output could be in recession next year.

According to Asia’s richest man Gautam Adani, India is set to become a $30 trillion economy by 2050 — a nearly 10-fold jump from its current size — driven by rising consumption and social and economic reforms.

He said while it took 58 years for India to become a trillion-dollar economy, the country will add an equivalent sum to GDP every 12-18 months and will be the world’s second-largest economy by 2050.

Adani said India is on the cusp of extraordinary growth and will become the world’s third-largest economy ‘well before’ 2030.

A recent report by Morgan Stanley expects that India’s GDP is likely to surpass $7.5 trillion by 2031, more than double current levels. Morgan Stanley said India is on track to become the world’s third-largest economy by 2027, surpassing Japan and Germany, and have the third largest stock market by 2030, thanks to global trends and key investments the country has made in technology and energy.

India is already the fastest-growing economy in the world, having clocked 5.5 per cent average gross domestic product growth over the past decade. Now, three megatrends—global offshoring, digitalization and energy transition — are setting the scene for unprecedented economic growth in the country of more than one billion people, it said in a report “India’s impending boom.”

“We believe India is set to surpass Japan and Germany to become the world’s third-largest economy by 2027 and will have the third-largest stock market by the end of this decade,” said Ridham Desai, Morgan Stanley’s chief equity strategist for India.

“Consequently, India is gaining power in the world order, and in our opinion, these idiosyncratic changes imply a once-in-a-generation shift and an opportunity for investors and companies.”

While Goldman Sachs expects India’s growth to slow to 5.9 per cent in 2023 from an estimated 6.9 per cent growth in 2022, the World Bank on October 6 projected a 6.5 per cent growth rate for 2f022-23, a drop of one percentage point from its June 2022 projections, citing the deteriorating international environment. The International Monetary Fund projected for India a growth rate of 6.8 per cent in 2022 as compared to 8.7 per cent in 2021.

— issacjohn@khaleejtimes.com

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