QUICK TURN

India is about to beat China as the world’s fastest-growing big economy

Obsession
China's Transition
Obsession
China's Transition

The International Monetary Fund downgraded its projections for global growth (pdf) this month, as well as for a number of countries, individually. One of those countries is China, which is projected to see slowed growth this year and the next. The economy left almost untouched? India, which means it’s on track to surpass China as the fastest-growing large economy, the Wall Street Journal notes.

China is expected to grow 6.8% this year and 6.3% in 2016. That’s a decrease from October, when the IMF projected China’s growth for 2015 at 7.1% (pdf, pg. 55). It projected a 6.4% growth for India this year, and the latest report predicts a minor slowdown, to 6.3%.

India-is-projected-to-pass-China-as-the-fastest-growing-big-economy-India-China_chartbuilder

According to the January IMF report, there are a few reasons this is happening—China saw a decrease in investment growth toward the end of last year, and that slowdown will affect the surrounding Asian countries, but not India. The IMF report credits New Delhi’s stability in part to the recent economic reforms that Indian Prime Minister Narendra Modi has implemented, as well as a boost in trade because of lower oil costs.

IMF projections, while an important indicator of where the global economy is going, also have a tendency to be overly optimistic when it comes to forecasting growth (pdf, pg. 195). And a slowing China doesn’t necessary spell trouble for the rest of the world, as Quartz noted back in 2013—it might actually give other economies a chance to meet some of the global demand that China normally eats up.

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