India, currently the world's fifth-largest economy, is poised to emerge as the world's third-largest economy with a GDP of $7.3 trillion by 2030, according to S&P Global Market Intelligence. In doing so, it would surpass Japan's GDP and become the second-largest economy in Asia. After experiencing robust economic growth in 2021 and 2022, India's economy has continued to exhibit strong expansion throughout 2023.
The IMF has projected India's GDP growth at 6.2-6.3% for the fiscal year ending in March 2024, making it the fastest-growing major economy this fiscal year. In the April-June quarter, India's GDP grew by a remarkable 7.8%.
S&P Global attributes this robust economic outlook to India's enduringly strong domestic demand, further fueled by substantial foreign direct investment (FDI) inflows over the last decade. India's advantageous demographic profile and rapidly rising urban household incomes contribute to its promising long-term growth prospects.
S&P Global anticipates that India's nominal GDP, measured in USD terms, will climb from $3.5 trillion in 2022 to $7.3 trillion by 2030. This rapid economic expansion is expected to propel India's GDP past Japan's by 2030, establishing India as the second-largest economy in the Asia-Pacific region. By 2022, India's GDP had already surpassed the GDP of the UK and France. By 2030, it is projected to exceed Germany's GDP.
At present, the United States is the world's largest economy, with a GDP of $25.5 trillion, accounting for approximately 25% of the world's GDP. China ranks as the second-largest economy with a GDP of about $18 trillion, representing nearly 17.9% of the world's GDP. Japan holds the third position with a GDP of $4.2 trillion, followed by Germany with a GDP of $4 trillion.
S&P Global emphasizes several key growth drivers that underpin India's long-term economic outlook. Among these factors is India's burgeoning and rapidly expanding middle class, which is driving consumer spending. The digital transformation currently underway in India is expected to further accelerate the growth of e-commerce, reshaping the retail consumer market landscape in the coming decade.
S&P Global predicts that by 2030, more than 1.1 billion Indians will have internet access, more than doubling the estimated 500 million internet users in 2020. The surge in e-commerce and the adoption of 4G and 5G smartphone technology are attracting global technology and e-commerce giants to India.
India's impressive growth in FDI inflows over the past five years is also set to continue, with significant investments from global technology giants such as Google and Facebook. Moreover, the COVID-19 pandemic did not deter FDI inflows, indicating the sustained momentum of India's economic attractiveness.
Overall, India is poised to maintain its status as one of the world's fastest-growing economies in the coming decade. This promising outlook makes India an essential long-term growth market for multinational companies across a broad spectrum of industries, ranging from manufacturing to services.
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