The International Monetary Fund (IMF). in its latest update. has said that India is one of the large emerging economies that has been doing better than expected. IMF said India has been doing better for a while now and that India is, in fact, one of the growth engines in the world economy at this point.
IMF said important divergences are appearing. The slowdown is more pronounced in advanced economies than in emerging markets and developing economies. Among the advanced economies, the US has been revised up, with resilient consumption and investment, while the euro area has been revised down, as tighter monetary policy and the energy crisis took a toll.
There is divergence also among emerging markets and developing economies, with China facing growing headwinds, while Brazil, India. and Russia are revised up.
After two years of rapid economic growth in 2021 and 2022, the near-term economic outlook for India is for continued rapid expansion during 2023-24, underpinned by strong growth in private consumption and investment, S&P Global Market Intelligence said in a recent update.
The acceleration of foreign direct investment inflows into India over the past decade reflects the favourable long-term growth outlook for the Indian economy, helped by a youthful demographic profile and rapidly rising urban household incomes.
India’s nominal GDP measured in USD terms is forecast to rise from $3.5 trillion in 2022 to $7.3 trillion by 2030. This rapid pace of economic expansion would result in the size of the Indian GDP exceeding the Japanese GDP by 2030, making India the second largest economy in the Asia-Pacific region.
By 2022, the size of the Indian GDP had already become larger than the GDP of the UK and also France. By 2030, India’s GDP is also forecast to surpass Germany, the research said. The long-term outlook for the Indian economy is supported by a number of key growth drivers. An important positive factor for India is its large and fast-growing middle class, which is helping to drive consumer spending.
The rapidly growing Indian domestic consumer market as well as its large industrial sector have made India an increasingly important investment destination for a wide range of multinationals in many sectors, including manufacturing, infrastructure and services, the report said.
The digital transformation of India that is currently underway is expected to accelerate the growth of e-commerce, changing the retail consumer market landscape over the next decade. This is attracting leading global multinationals in technology and e-commerce to the Indian market.
By 2030, 1.1 billion people in India will have internet access, more than doubling from the estimated 500 million internet users in 2020.
The rapid growth of e-commerce and the shift to 4G and 5G smartphone technology will boost home-grown unicorns. The large increase in FDI inflows to India that has been evident over the past five years is also continuing with strong momentum evident even during the pandemic years of 2020-2022.
India’s strong FDI inflows have been boosted by large inflows of investments from global technology MNCs such as Google and Facebook that are attracted to India’s large, fast-growing domestic consumer market, as well as a strong upturn in foreign direct investment inflows from manufacturing firms.
Overall, India is expected to continue to be one of the world’s fastest growing economies over the next decade. This will make India one of the most important long-term growth markets for multinationals in a wide range of industries, including manufacturing industries such as autos, electronics and chemicals to services industries such as banking, insurance, asset management, health care and information technology, it added.