India is projected to achieve an average annual GDP rate of 7.9 per cent over the next 8 years, the highest in the world overtaking China, according to a Harvard study that said growth in emerging markets will continue to outpace developed countries.
The Center for International Development (CID) at Harvard University in its report said “after decades spent trailing the growth of its northern neighbour and economic rival, India now tops the projections of annual growth rates to 2023”.
India is projected to record average annual growth rates of 7.9 per cent over the next eight years, nearly double of China’s 4.6 per cent projected growth over the period.
“Our Economic Complexity predictions find India’s disputed upper hand in growth will expand into a widening gap in the medium-term, with growth projections to 2023 predicted to be at 7.9 per cent annually, well ahead of the 4.6 per cent projected for China,” said Ricardo Hausmann, Professor of the Practice of Economic Development at Harvard Kennedy School (HKS) and director of CID.
Relative to China’s 9.1 per cent annual growth of the past quarter century, this growth projection presents an important slowdown for China, but stands just below the 6 per cent growth rate in 2020 predicted by the IMF and China’s leadership, the report said.
Using their own measure of economic complexity that captures the productive capabilities embedded in a country’s exports, CID researchers paint a new picture of the economic growth landscape, which foresees growth in emerging markets to continue to outpace developed countries. They also predict important reversals among growth leaders, with India expected to overtake China.
CID’s projections are also bullish on East Africa. Four East African countries — Uganda, Tanzania, Kenya, and Madagascar — rank in the top ten, with all predicted to grow at least 6 per cent annually.
The projections also favour Pakistan’s potential, at 5.1 percent predicted growth, presenting a clear picture of South Asia and East Africa’s positive growth outlook.
Southeast Asia also includes several high-growth countries, driven by its largest country, Indonesia, which is anticipated to grow at 5.2 per cent annually to 2023.
According to the report, outlooks for Europe and the US show little optimism. The US growth rate in 2023 is predicted to be 2.4 per cent, while major European players range from 2.3 per cent in Italy to 3.7 per cent in Spain.
“Countries accumulate productive knowledge by developing their respective capacity to make both more products, and products of increasing complexity-this underpins economic growth,” said Hausmann.
“Countries like India, Kenya, and the Philippines have made important recent gains in diversifying their exports into more complex products. Historically, these gains in economic complexity have translated into higher incomes, which position them as the frontrunners globally for their growth prospects.”