IMF predicts India’s GDP to outpace China’sIMF predicts India’s GDP to outpace China’s
March 15, 2015

India-china-GDP-IMFIn a move that would further boost Chinese investments into India, the International Monetary Fund (IMF) has predicted that India’s GDP growth could outstrip China’s in this financial year 2015-16. According to the IMF’s report, for the first time in 16 years, India’s GDP will grow faster than China’s.

India is projected to grow at 7.5 percent in both 2015-16 and the fiscal after that (based on market prices), while China, having experienced its worst economic slowdown in 24 years last year, could witness its growth sliding further to 6.8 percent in 2015 and 6.3 percent in 2016. While the IMF’s growth projections for China have been retained at the January level, those for India have been revised up by from 6.3 percent for 2015-16 and 6.4 percent for 2016-17.

China’s annual economic growth slowed to a six-year low of 7.0 per cent in the first quarter of 2015 as compared to a growth of 7.3 percent in the last quarter of 2014. The turnaround could signal a change in tide and ring true what analysts have predicted for years – that China’s growth will eventually even off and India which has been a late bloomer will grow faster than China. Over the past decade, India has always been pitted against China, alikened to the tortoise and the hare, the elephant and the dragon, however inertia in the markets has now caused Indian companies to do much better this past fiscal.

While numbers are still being computed, owning to the end of the last financial year just 2 weeks prior, a clear sign of a strengthening Indian economy is the rising number of Chinese investments in India. Interested in India’s new age telecom and technology space, as opposed to the lower value raw materials that were traditionally traded from India to China, Chinese consumer firms are now keen to tap into India’s 1.3 billion consumers.

In addition to economic numbers, Chinese politicians have been wooing India and are even keen to resolve the border issue that has remained as a thorn between bilateral relations. While Jack Ma was recently in India to give birth to an incubation cell based out of Bangaluru, China’s Vice Premier Wang Yang recently met with N. Chandrababu Naidu, Chief Minister of the Eastern Indian state of Andhra Pradesh to sign an MoU augmenting trade ties between the countries.

Industry insiders also assuage, towards India’s growing influence internationally and with China, with whom they have always shared a sweet and sour relationship. While too early to comment on, many feel India’s growing economic might, and ability to offer her markets as leverage, will give her a bigger bargaining chip with China.

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