While we all talk all of the time about the size of the economy of the United States and the growth of China in the past few decades, the reality is that India is now the fastest-growing economy in the world. It has posted an annualized 5.5% average gross domestic product growth over the past ten years.
“We believe India is set to surpass Japan and Germany to become the world’s third-largest economy by 2027 and will have the third-largest stock market by the end of this decade,” said Ridham Desai, Morgan Stanley’s Chief Equity Strategist for India. “Consequently, India is gaining power in the world order, and in our opinion these idiosyncratic changes imply a once-in-a-generation shift and an opportunity for investors and companies.”
Morgan Stanley, in a special blue paper predicts, that India’s GDP will double to over $7.5 trillion by 2031, with its stock market booming too. They are expecting India’s exports to double.
The World Bank’s latest report on the Indian economy released this month also said that India is relatively well positioned to weather global headwinds compared to most other emerging markets.
The Voice of America did a segment on India’s economy a few days ago.
“There are good projections for the Indian economy. Plus, even in our friends’ circle, a lot of people are changing jobs, moving to better pastures. For us also, my wife, has switched recently to a new job,” Jaideep Manchanda, a marketing professional in New Delhi who recently bought a new car, told the Voice of America in an interview.
His story is an example of how “the automobile industry for example recorded its highest-ever sales in November. New investment is flowing into the country, helping it withstand the trend of slowing growth in most countries,” reports the Voice of America.
Part of it all has to do with geopolitics.
“The United States is pursuing an approach called friend-shoring to diversify away from countries that present geopolitical and security risks to our supply chain. To do so we are proactively deepening economic integration with trusted trading partners like India,” Yellen said at a speech to leaders at a Microsoft facility.
To go back to the Morgan Stanley analysis, they see this as an investment opportunity. In the Financial Times, Chetan Ahya, Morgan Stanley’s top Asian Economist, argued in an article that India today is where China’s economy was in 2007.
-Mike
