Sikkim News Update

Opinion | India’s Goal to Become the Third-Biggest Economy in the World by 2027

<p>In the last few days, three noteworthy discoveries have come to light; all three having to do with the economy and are inextricably intertwined, with long-term effects on the world economy. Japan’s economy entered a recession in 2023 after declining for two straight quarters. A recession has officially struck the beleaguered United Kingdom over the last two quarters of 2023. This has affected everything right away. In the global economic sweepstakes, Germany climbed to third place, while Japan fell to fourth.</p>
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<p>As we approach another Lok Sabha election in the next two months, concerns about the future of the Indian economy have been raised by the prominent reporting of all these in the past two days.</p>
<p>First, after two periods of economic decline of 0.3% (October–December 2023) and 0.1% (July–September 2023) the United Kingdom transitioned from stagnation to recession. The recession that the Bank of England and analysts like to refer to as “technical” was exacerbated by a decline in consumer demand for goods and services that led to unfavorable consumer mood and a political stalemate between the Tories and Labour Party ahead of this year’s elections. However, Prime Minister Rishi Sunak is enthusiastic about the future.</p>
<p>Second, a thorough explanation is required for the peculiar instance of Japan. Major variables that have an influence on the Yen’s value in relation to the US dollar include an aging population, negative population growth for the nth year, and a labor shortage. Japan’s GDP contracted by 0.4% in October 2023 and 3.3% in July–September 2023. The fall of the yen has affected values in all ranges. The Yen has lost 20% of its value versus other currencies during the last year or so, but it has gained 30% against the US dollar.</p>
<p>At 150 vs the US dollar, the Yen fell to its lowest points on October 20, 2022. It has been trading between 104.7 and 105 versus the US dollar over the last week. The weakening of the yen in relation to the US dollar has significance since Japan buys food and energy items from the US.</p>
<p>Thirdly, Germany’s rise to the third-largest economy—at $4.55 trillion compared to Japan’s $4.19 trillion—is noteworthy for a number of reasons. While the ongoing decline of the yen contributed significantly to Japan’s GDP, Germany’s economic performance has been lackluster as it has dealt with labor shortages, human resource constraints, and euro values.</p>
<p>While economists predict a small positive increase of 0.3 percent in 2024 and 1.2 percent in 2025, the German economy shrank by 0.3 percent in 2023. In Germany, a trade-driven recovery may be anticipated. However, given the decline in global demand and Germany’s manufacturing issues, fingers crossed.</p>
<p>There is a fourth aspect that is mentioned sporadically and in hushed tones. The biggest economy, the United States, is likely to enter contraction mode this year after seeming to have escaped recession in 2023 with a soft landing. Although there is still no official word on it, some argue that rising retail prices and inflation caused the US economy to start declining earlier than expected.</p>
<p>China, which has experienced a lot in the last several months, is the fifth significant component. The second-biggest economy in the world, China’s, is predicted to grow by 4.6% and 4% in 2024 and 2025, respectively. In the Year of the Dragon that predicts great things to come, where does that leave the dragon economy? Under President Xi Jinping, the Chinese economy has been suppressed by protracted Covid-related regulations, notwithstanding the declared 5.6% growth in the GDP in 2023. The International Monetary Fund has its own data points that suggest a significantly smaller growth, thus it does not trust these statistics.</p>
<p>Given this context, the events in India will be fascinating to see for people everywhere, including Indians, who are searching for a glimmer of hope as they battle to combat the global economic depression.</p>
<p>India will remain the “brightest star” with 6.5-7 percent growth as the El Nino fades and the monsoon outlook is excellent. In addition to being the fastest-growing economy, India’s growth will undoubtedly maintain the global trend favorable.</p>
<p>Global headwinds, however, cannot be willed away. There is little indication that the Russia-Ukraine War will finish soon, and Israel and Hamas’ second brutal confrontation will only become worse. The effect is seen on shipping routes in international waterways, particularly in the Red Sea, which restricts the safe passage of boats.</p>
<p>Furthermore, the Reserve Bank of India (RBI) has developed a reputation for itself by handling monetary policy matters independently of the US Federal Reserve and the European Central Bank. The Indian economy will only remain balanced if there is sustained high domestic consumption, production growth in goods and services, and robust influx of both foreign and local capital.</p>
<p>Given this context, it is plausible to suggest that the country will surpass both Germany and Japan to become the third-largest economy in the world by 2027, or maybe even sooner. This is supported by a stable and powerful political system.</p>
<p>In his third term, Prime Minister Narendra Modi has pledged both within and outside of Parliament that India’s GDP will rank third, valued at more than $5 trillion. Prime Minister Modi is a reformer, and strong foundations and a robust economic order will speed up the process. As some economists have predicted, a worldwide recovery would occur in the coming years, which would guarantee India’s position in the sun sooner rather than later.</p>