The International Monetary Fund (IMF) has stated that India has outperformed China in 2015, to become the world’s fastest growing economy. According to separate forecasts, the IMF and World Bank are expecting an ongoing expansion over the next few years.
According to IMF’s statement in its bi-annual World Economic Outlook, India’s growth has expanded from 7.2 percent to 7.8 percent in 2015. The expansion was acknowledged by the World Bank as well. However, both had different forecasts for 2016. The IMF expects a 7.5 percent growth next year, the fastest pace in five years, while the World Bank expects a 7.9 percent growth.
“India’s growth is expected to strengthen from 7.2 percent last year to 7.5 percent this year and next. Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower oil prices,” says the IMF. The World Bank has also noted that India’s solid expansion has helped South Asia become the fastest growing region in the world.
India received a further positive rating from the credit rating agency Moody’s as they upgraded India’s credit outlook.
According to World Bank’s South Asia Economic Focus report, India’s growth acceleration is “driven by business-oriented reforms and improved investor sentiment.” The report also states that investment growth can help the economy expand even further by 2016- 2018.
“The country is attempting to shift from consumption to investment-led growth, at a time when China is undergoing the opposite transition,” it reported.
In contrast, the downward pressure in China’s economy is continuing to reflect on future forecasts. The country’s economy has declined to 6.8 percent in 2015 from 7.4 percent in 2014. This will be the slowest growth since 1990. The IMF described this slowdown as a move reflecting “a more sustainable growth that is reliant on investment.”
However, India will not be able to take the lead solely through a high growth rate. China’s economy is still holding strong with a GDP worth $10- trillion. India on the other hand has a much smaller GDP worth $2-trillion.