India Likely To Replace Japan As World’s Third Largest Economy
More evidence the emerging markets are taking over the world growth story. India is close to replacing Japan as the world’s third largest economy, possibly as early as this year, says a senior economist at India credit rating agency Crisil. Sunil Sinha, the firm’s main macroeconomist, based the projections on India’s purchasing power parity, saying that tsunami-wracked Japan will see a decline in GDP this year, while India’s economy will expand as will the purchasing power of its currency, the rupee.
As it stands now, India is the fourth-largest economy in the world, trailing the U.S., China and Japan. GDP figures from 2010 show that the Japanese economy was worth $4.31 trillion, with India at $4.06 trillion. Not far behind. The earthquake and tsunami in March nearly shut Japan down for a month and now Japan’s economy is expected to post no growth at all this year, at best, while India’s economy will grow between 7% and 8% in 2011.
“India should overtake Japan in 2011 to become the third-largest economy in the world at purchasing power parity,” Sunil Sinha, head of research and senior economist at Crisil was quoted saying in The Economic Times of India on Tuesday.
The International Monetary Fund’s growth forecast for India and Japan show both country’s GDP levels about the same in constant dollar terms, but the disaster in Japan has taken its toll on the nation’s growth. “Were it not for the earthquake and tsunami, India would have overtaken Japan in around 2013-14,” said Sinha.
PricewaterhouseCoopers, or PwC, reported recently that the Indian economy would be the third largest by next year. This year, next year, or 2013, it’s only a matter of time before the world’s leading three economies are two-thirds emerging market nationss.
The IMF expects the Japanese economy to contract 0.7% this year while it forecasts India GDP at 8.2%.