hear the news
India has overtaken Britain to become the fifth largest economy in the world. The development has dealt yet another blow to the government in London as it grapples with an already dire livelihood shock. India has overtaken Britain to become the fifth largest economy in the last three months of 2021. This calculation is based in US dollars and according to GDP data from the International Monetary Fund, India has increased its lead in the first quarter.
Challenges before the new British PM
Britain’s fall in the international rankings comes against a difficult backdrop for the new prime minister. Conservative Party members will choose Boris Johnson’s successor on Monday. Foreign Secretary Liz Truss is expected to defeat former chancellor Rishi Sunak. The winner will take on the country facing the sharpest inflation in four decades and rising risks of recession that could last well into 2024, according to the Bank of England. In contrast, the Indian economy is projected to grow by over 7% this year. The gains in Indian stocks in the quarter have seen gains in the MSCI Emerging Markets Index, second only to China.
India’s $854.7 Billion Economy
The size of the Indian economy stood at $854.7 billion for the full March quarter on an adjusted basis and using the dollar exchange rate on the last day of the relevant quarter. On this basis, the size of the UK economy was $816 billion. Calculations have been made using historical exchange rates on the IMF database and at the Bloomberg terminal. Britain is likely to fall further since then. UK GDP grew just 1 per cent in cash in the second quarter and shrank 0.1% after adjusting for inflation. Sterling has also shown weakness against the dollar against the rupee, with the pound falling 8 per cent against the Indian currency this year.
India was ranked 11th a decade ago
The IMF’s own forecasts show that India has overtaken the UK on a year-on-year basis this year, leaving only the US, China, Japan and Germany behind. A decade ago, India was ranked 11th among the largest economies, while the UK was at 5th.