India will be the base to the economic pole of global growth over the coming decade, remaining ahead of China, according to a Harvard University research.
The study also warns of a continued slowdown in global growth over the coming decade. India and Uganda top the list of the fastest growing economies to 2025, at 7.7% annually.
“The economic pole of global growth has moved over the past few years from China to neighbouring India, where it is likely to stay over the coming decade,” new growth projections presented by researchers at Center for International Development at Harvard University (CID) said.
Growth in emerging markets is predicted to continue to outpace that of advanced economies, though not uniformly. The projections are optimistic about new growth hubs in East Africa and new segments of Southeast Asia, led by Indonesia and Vietnam.
Researchers attribute India’s rapid growth prospects to the fact that it is particularly well positioned to continue diversifying into new areas, given the capabilities accumulated to date.
“India has made inroads in diversifying its export base to include more complex sectors, such as chemicals, vehicles, and certain electronics,” it said.
The new data reveals a decline in China’s exports. China’s economic complexity ranking also falls four spots for the first time since the global financial crisis.
“China’s rapid growth rate over the past decade has narrowed the gap between its complexity and its income, which researchers suggest is the harbinger of slower growth,” the research said.
The growth projections still have China growing above the world average, though at 4.4% annually for the coming decade, the slowdown relative to the current growth trend is significant, it added.
The growth projections are based on measures of each country’s economic complexity, which captures the diversity and sophistication of the productive capabilities embedded in its exports and the ease with which it could further diversify by expanding those capabilities.
“The major oil economies are experiencing the pitfalls of their reliance on one resource. India, Indonesia, and Vietnam have accumulated new capabilities that allow for more diverse and more complex production that predicts faster growth in the coming years,” said Ricardo Hausmann, director of CID, professor at the Harvard Kennedy School (HKS), and the lead researcher of The Atlas of Economic Complexity.
Uganda joins three other East African countries in the top 10 fastest growing countries, though a significant fraction of that growth is due to rapid population growth. On a per capita basis, Uganda is the only East African country that remains in the top 10 in the growth projections, though at 4.5 per cent annually its prospects are more modest.