This year, India will surpass China with an expected growth of 7.7 per cent, a jump of almost 1.5 per cent from the projection made in January, according to a new UN report.
“India is now projected to grow by 7.6 per cent in 2015 and 7.7 per cent in 2016, surpassing the growth of China,” said the United Nations Department of Economic and Social Affairs(UNDESA) report.
Earlier in January, the UNDESA report had stated that the GDP of India will be 6.2 in this year.
“This revision, mostly reflects a higher growth trajectory in India, where the recent changes in methodology and data sources have resulted in a considerably higher official growth figures for the past two years,” said the latest report.
The recent UN report concurred with reports from other international companies like World Bank and the International monetary fund(IMF), that India will have a faster growth rate in the future.
“Overall, I think the authorities in India have done a very good job over the past two years and this is actually reflected in some indicators,” Ingo Pitterle, a UNDESA Economic Affairs Officer and India expert said.
“In 2013 India was grouped among the fragile economies of Turkey, South Africa, Indonesia and Brazil. And now, you look at the same variables, they look very different,” Pitterle said.
“When you look at the currencies side, the Indian Rupee is the only currency that has held up well here, which is a sign of confidence by investors and the international community in the Indian economy”, he said.
The report also pointed out to string of factors to give a clear view that India was having a very sustainable economic condition.
“The rupee has done better than most currencies, inflation is down, monetary policy is prudent, current account deficit has declined, external imbalances have reduced and oil prices have softened”, the report said.
China’s November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years as domestic demand softened further, underlining rising risks to the economy as China works to defuse a trade dispute with the United States.
The world’s second-largest economy has been loosing momentum in recent quarters as a multi-year government campaign to curb shadow lending put increasing financial strains on companies in a blow to production and investment.
The slowdown in Chinese industries has started to weigh on consumer sentiment this year, tapping the brakes on retail sales. Big-ticket items have been the first to be hit, with auto sales declining since May.
Pace of retail sales slows
Retail sales rose 8.1 percent in November from a year earlier, data from the National Bureau of Statistics showed Friday, below expectations for an 8.8 percent rise and the slowest since May 2003. In October, sales increased 8.6 percent. Auto sales fell a sharp 10.0 percent from a year earlier.
The slump was in line with data released by China’s top auto industry association, which showed sales dived 14 percent in November, the steepest drop in nearly seven years.
The stresses on broad activity have been compounded by a sharp escalation in China’s trade dispute with the United States, which has threatened to fracture global supply chains, chill investment, exports and growth.
Pace of industrial output slows
Industrial output rose 5.4 percent in November, missing analysts’ estimates and matching the rate of growth seen in January-February 2016. Factory output had been expected to grow 5.9 percent, unchanged from October’s pace.
Over the weekend, China reported far weaker than expected November exports and imports, reflecting slower global demand and waning domestic factory activity as profit margins narrow.
With economic growth at its weakest since the global financial crisis, Chinese policymakers are ramping up spending, pushing banks to increase lending and cutting taxes to shore up businesses and ward off a more damaging slump.
The weaker November industrial output and retail sales growth numbers showed that downward pressure on the economy is increasing, said Mao Shengyong, spokesman at the statistics bureau.
Still on track to hit growth target
But China is on track to hit its 2018 economic growth target of around 6.5 percent, Mao told reporters.
“On balance, the latest data show an economy that is under pressure on both the external and domestic front, with policy efforts to shore up growth still falling short,” Julian Evans-Pritchard, senior China economists at Capital Economics, wrote in a note.
A temporary 90-day trade war truce agreed by the United States and China early this month may have removed some of the immediate pressure on the economy.
The impact on China’s economy from the Sino-U.S. trade frictions are not apparent yet, Mao cautioned, adding that the nation will face more “external” uncertainties in 2019.
Indeed, even in the unlikely event the world’s top two economies reach a durable resolution in their dispute, ebbing domestic demand, mounting household debt and a cooling real estate sector point to a further slowdown in growth next year. (VOA)