India will become the 3rd largest importer by 2050 (British report)
NEW DELHI : With a growing middle class and growing discretionary spending, India will become the world’s third-largest importer by 2050 with a 5.9% share of global imports, just behind China and the United States, new report shows , mimicking its projected ranking among economies. Currently, India is ranked eighth largest importing country with an import share of 2.8% and is expected to become the fourth largest importer by 2030.
“The share of the US and the EU in most import sectors is expected to decline until 2030, as the growing purchasing power of the Asian middle class accounts for a growing share of global import demand. . This shift is particularly marked in the food, travel and digital services sectors, where larger and richer populations in the Indo-Pacific are expected to consume more discretionary goods and services, âsaid the latest Global Trade Outlook published by the UK Department for International Trade.
The economic center of gravity of the world has shifted east for decades due to the rapid growth of the Indo-Pacific, resulting in a shift in trade patterns as it moves. âBetween 2019 and 2050, 56% of global growth is expected to come from the Indo-Pacific, compared to a quarter of the EU and North America combined. Growth within the Indo-Pacific is also expected to rebalance over time, with South Asia’s contribution (boosted by India) increasing, âhe added.
China is a major driver of this economic shift to the East, as it is expected to become the world’s largest economy by 2030. China has already supplanted the United States in terms of power parity. purchase (PPA) (which explains the local price differences) in the mid-2010s. But based on market exchange rates, which are more relevant to trade, the change is expected to occur around 2030. âAt this point, the two countries will account for around 22% of global GDP,â the report said.
The report predicted that India would rise to third place by 2050 in the ranking of the world’s largest economies, just behind China and the United States, with a share of 6.8% of global GDP. Currently, India is ranked fifth in the world economy with a share of 3.3%. India’s GDP is expected to cross Germany by 2030 to become the fourth largest economy.
“The role of emerging economies in the trading system will increase over time, in line with their increasing weight in the global economy,” the report said.
The âE7 groupâ of the seven largest emerging economies – China, India, Brazil, Russia, Indonesia, Mexico and Turkey – is expected to equal the G7’s share of global import demand by 2050. The seven richest countries of the world – Canada, France, Germany, Italy, Japan, United Kingdom and United States are part of the G7 group. âDuring the first two decades of this century, growth in labor productivity (the main driver of rising living standards) has been on average three times faster in the seven largest emerging economies than in the G7 . As a result, the share of the G7 in global GDP increased from 65% in 2000 to 46% in 2020, while that of the E7 increased from 11% to 28%. Over the next thirty years, labor productivity growth in the E7 is expected to grow at about twice the rate of the G7, with the E7 overtaking the G7 in terms of economic size during the 2030s. This shift in power economic will likely mean that emerging economies will play an increasing role in the global trading system, âhe added.
However, the report warned that while emerging economies have the potential to ‘catch up’, they also face major challenges, including the need to move from imitation to innovation to escape the middle income trap, struggle against debt and bounce back from covid.
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