India overtakes China to become the fastest growing economies: World Bank

The latest World Bank report about the economic health of the member countries clearly says that while India is among the fastest growing economies - big and small, China is not doing as well.

Chinese economy is slowing down. In its latest report, the World Bank has said, "The continued gradual slowdown in China will slightly offset a pickup in the rest of the region led by a rebound among commodity exporters. Growth in China is anticipated to slow to 6.5 percent this year and 6.3 percent in 2018."

According to the World Bank's latest edition of the Global Economic Prospects, India is the fourth fastest growing economy in the world. China shows a clear sign of slowdown and ranks at number 16 in terms of GDP growth rate.

INDIA PICKING UP

The World Bank has pegged India's growth rate at 7.2 for the current year on the back of rising export and increase in government spending.

Writing in the June edition of the Global Economic Prospects, the The World Bank analysts said, "In India, recent data indicate an acceleration in growth, with an easing of cash shortages and a rise in exports. An increase in government spending, including on capital formation, has partially offset soft private investment."

According to the World Bank, "India is expected to accelerate to 7.2 per cent in fiscal 2017 (April 1, 2017 - March 31, 2018) and 7.5 per cent in the following fiscal year. Domestic demand is expected to remain strong, supported by policy reforms."

CHINA SLIPS

In terms of growth rate, India is placed behind smaller economies of Estonia, Uzbekistan and Nepal. On the other hand, China failed to secure a place in the top 15 economies in terms of GDP growth rate.

The World Bank said, that though China has shown recovery in exports and the robust consumption pattern has helped it grow at 6.9 per cent in the first quarter, Beijing's slowdown is pulling down the east Asian region. Other countries in the region are showing better growth rates.

The World Bank has also expressed concern about exacerbating financial vulnerabilities of China on account of "elevated domestic debt."

According to the World Bank, the policy uncertainty in the United States and Europe is likely to impact Chinese growth rate more adversely. The trade, immigration and fiscal policies of the US are under review by the Donald Trump administration.

Similarly, the exit of the United Kingdom from the European Union carries financial risks that could weigh on heavily on the China's growth prospects.

Out Of The Box July 18, 2017