India : A crucial country for the future of the global economy
India has sustained an average annual growth of more than 7% since 2014, making it the most dynamic country in the G20. Hence, this country will be crucial for the future of the global economy in the coming decades.
If this tendency is maintained, India will, this year, become the world’s fifth largest economy in current dollars, ahead of France and the United Kingdom. Growth should be reaching more than 7.5% in 2018 compared to 6.7% in 2017. And the recent momentum remains quite good: the three-month manufacturing PMI index has continued to grow since the beginning of 2015, even after taking into account the impact of rising oil prices and recent fluctuations in the local bond market.
Despite appearing in 2012-2014 as one of the most financially fragile major emerging countries (with Brazil, Indonesia, Turkey and South Africa), India has significantly improved its position since. Inflation rose from over 12% at the end of 2013 to just over 5% in December 2017, even though it has risen in recent months. The current account deficit stands at just over 1% of GDP compared to 5% in 2013. The public deficit has been reduced, as has external private debt in dollars. India’s sovereign rating was raised in November by Moody’s, for the first time in thirteen years.
It is clear that the future of India will largely depend on the quality of its governance. The track record of Narendra Modi since his election in 2014 is undeniably favourable in terms of structural reforms – land reform, liberalization of finance and media, opening of infrastructure to foreign investment. All in all, India is in full gear to attain great heights in the world economy.