India will overtake Japan as the world’s third largest economy and China will be nearly double the size of the United States by 2030, according to a report released by Standard Chartered on Monday.
The report’s researchers expect China’s economy to hit US$73.5 trillion and India’s to reach US$30.3 trillion as the global economy reaches US$308 trillion in nominal terms by 2030. Such levels would represent massive share increases for both economies – China would account for 24 percent of the world’s economy, up from 9 percent currently, and India would take up 10 percent, up from 2 percent.
“China has grabbed the attention, and rightly so. It is experiencing an industrial revolution, spearheaded by its phenomenal infrastructure investment. But India, with democracy, entrepreneurship, contracts and property rights, has much going for it too, plus a young population,” the report said.
The report suggests that as China’s economy becomes larger, its years of double-digit growth may soon be at an end just as India’s are about to begin. Standard Chartered expects China’s growth to gradually slow over the next three years to rates of 10 percent (2010), 8.5 percent (2011), and 8 percent (2012) while India’s growth is forecast to gradually speed up to rates of 8.1 percent (2010), 8.5 percent (2011), and 8.8 percent (2012). These trends look to continue with China averaging 6.9 percent growth and India averaging 9.3 percent or higher over the next two decades to 2030.
“There are credible arguments that India may even achieve a trend growth rate nearer 12 percent or so, with certain conditions in place,” according to the report.
Standard Chartered also had optimistic forecasts for arguably the most important economic indicator – per capita income.
“Now, China is the world’s most dynamic economy, and India will be soon. As a result, living standards, as measured by real per-capita income, will increase nine-fold in China and India between 2000 and 2030, according to our projections,” the report said.
The report expects per capita income in China to rise from current levels of US$4,166 to US$21,420 over the next 20 years while India’s looks to grow from US$1,164 to US$7,380 over the same time horizon. This is an important distinction as China’s current per capita income is only 9 percent that of the United States, and, according to the report, where the United States was in 1878.
About the Author
This article was written for 2point6billion.com, which was founded by Chris Devonshire-Ellis.
Chris Devonshire-Ellis also founded Asia Briefing Media, and Dezan Shira & Associates.
