India is the “obvious candidate” to push global growth amid a lingering slowdown but it will need sustained GDP expansion to reach, by the middle of next decade, the share of world GDP that China had at the height of its boom in 2005, says an HSBC report.
“If the West is not bouncing back to its former strength any time soon, where will growth come from? India is the obvious candidate,” HSBC economists said in a note.
China as the economic engine has “begun to sputter” and India is the only other country with over a billion plus people and also grew “a tad faster” than its northern neighbour in the last year.
The note made it clear that the country’s economy is not large enough to make up for a slowdown in mainland China but added that it holds great potential.
“India may struggle to attain, for now, the growth rates China achieved at the height of its boom. Still, don’t count the country out just yet: assuming things keep ticking as long as they have, by the middle of the next decade India’s economy will account for the same world share as China did in 2005, the year when the mainland really started to make itself felt globally,” it said.
It termed this as a “momentous shift” which will be taking place, and added that this is going by the share of world GDP in dollar terms.
India will equal China’s 4.9 per cent share of world GDP in 2005 by the middle of next decade, it said, adding that if the country grows faster, the date can be advanced.
The expectation comes days after official data suggested the Indian GDP grew 7.6 per cent in fiscal year 2015-16 on the back of a faster 7.9 per cent growth in the last quarter.