India Takes Over China’s Growth Supremacy
By Sunburst Africa Editor
The year 2015, will go down in history as an important one as it marks a turning point in an aged long legacy between the world’s largest planned economy and the planet’s biggest democracy.
According to the International Monetary Fund’s World Economic Outlook released Tuesday, India’s economic growth will power past China’s for the first time since 1999 this year, the report said
The report showed that, India’s growth will climb to 7.5 percent, its fastest pace in five years, from 7.2 percent in 2014, the IMF said. On the other hand, China’s growth will slow, easing to 6.8 percent in 2015 from 7.4 percent the prior year. Such growth levels will be the weakest Chinese growth pace since 1990, in the aftermath of the Tiananmen Square crackdown, as shown by the data below.
|Year||China GDP Growth rates||India GDP Growth rates|
Data Source: IMF World Economic Outlook, 2015
The slowdown in China “reflects a move toward a more sustainable pattern of growth that is less reliant on investment,” according to the IMF report. Tempered growth in China will be one culprit behind slowing expansion in emerging markets as a whole in 2015, according to the report.
However, in India the report forecast growth to benefit from recent policy reforms, a consequent pickup in investment and lower oil prices- given that India is a net importer of oil. India’s outlook was boosted from prior projections, and the IMF also revised India’s growth for 2013 and 2014 upward following a change to national accounts statistics.
Whether India’s resurgence can be sustained remains to be seen as various domestic policy reforms need to transform into actual production in the long term and global conditions favouring India’s growth, especially the fall in oil prices needs to be sustained. India may also need to stock up oil reserves within these favourable global oil prices regime to continue to stimulate long term growth.
Other Oil importing countries like South Africa may also want to take advantage of the over 50 percent drop in oil prices to stimulate growth