India to Overtake China on Growth

By next year, India could be the world’s fastest-growing large economy.

That’s the view of a growing number of economists, many of whom think China’s economy will continue to slow this year and next, while India reaps the benefits of lower oil prices and policy reforms.

The International Monetary Fund became the latest organization to make the call, on Tuesday projecting that India’s economy will grow by 6.5% in 2016, faster than China’s predicted 6.3% expansion.
The IMF said it expects Beijing to tolerate weaker growth as policymakers push through needed structural reforms. India, meanwhile, will power ahead.

“In India … weaker external demand is offset by the boost to the terms of trade from lower oil prices and a pickup in industrial and investment activity after policy reforms,” the IMF said in its report.

Earlier this month, the World Bank made a similar prediction — although its economists think India will need an additional year to overtake China. The group is predicting 7% growth for both countries in 2016, but a 0.1 percentage point advantage for India the following year.

Even if it posts a faster growth rate, India will not approach China in terms of raw economic power.

India’s economic potential was once mentioned in the same breath as that of China. But the world’s biggest democracy has failed to deliver, and its economy is roughly a fifth the size of its Asian rival.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza