According to a recent report from HSBC Holdings Plc, India's remarkable economic progress is impressive but is unlikely to overshadow China as the primary driving force of the global economy anytime soon. Economists Frederic Neumann and Justin Feng argue that India currently operates on a limited scale, while China's economic magnitude is too substantial to be easily surpassed on the world stage.According to a recent report from HSBC Holdings Plc, India's remarkable economic progress is impressive but is unlikely to overshadow China as the primary driving force of the global economy anytime soon. Economists Frederic Neumann and Justin Feng argue that India currently operates on a limited scale, while China's economic magnitude is too substantial to be easily surpassed on the world stage.

HSBC anticipates that the economic disparity between India and China will continue to widen, reaching $17.5 trillion by 2028 based on IMF projections, equivalent to the current size of the European Union's economy. This projection contrasts sharply with the optimistic outlook of other entities, such as Barclays Plc., which recently suggested that India's consistent 8% growth could potentially propel it past China as a global growth leader within the next five years.

The HSBC report underscores the disparities in consumption and investment patterns between the two Asian giants. Even under the scenario of zero growth in China and a tripling of India's recent average investment spending, it would take another 18 years for India's investment expenditures to catch up with China's. Presently, China constitutes approximately 30% of global investment, whereas India's share is below 5%. India's contribution to global consumption is also less than 4%, significantly lower than China's 14%.

Despite these challenges, the HSBC economists do foresee India making substantial contributions to worldwide demand for commodities, consumption, and capital goods. They express optimism about India's future role in global trade, suggesting that the country could emerge as a major player, particularly in services exports, similar to China's current position in the global goods supply chains.

According to the International Monetary Fund's projections, India's economy is expected to grow by 6.3% in 2023 and 2024, while China's economy is anticipated to grow at rates of 5% and 4.2% during the same period.

Source: Indiatimes