"Not China"… Which Country Will Lead Asia's Growth Going Forward?

India's GDP Growth Rate Expected at 6.4% for This Fiscal Year
Domestic Consumption Increase Offsets Inflation and Export Slump

India has surpassed China to be named the country expected to lead growth in the Asia-Pacific region over the next three years.

On the 30th (local time), according to US CNBC and the Wall Street Journal (WSJ), Standard & Poor's (S&P) Global recently forecasted that India's gross domestic product (GDP) growth rate for the 2023-2024 fiscal year (April 2023 to March 2024) will reach 6.4%. This is 0.4 percentage points higher than the previous forecast of 6.0%. The International Monetary Fund (IMF) and the Reserve Bank of India (RBI) also predicted growth rates of 6.3% and 6.5%, respectively, for the same period.

S&P explained that the upward revision in growth rate is due to increased domestic consumption in India, which offset high food inflation and sluggish exports. The report also forecasted that other Southeast Asian countries such as Indonesia, Malaysia, and the Philippines will record positive GDP growth rates this year and next year, driven by strong domestic demand.

S&P lowered India's GDP growth forecast for the 2024-2025 fiscal year from 6.9% to 6.0%, but expects it to rise again to 7% in the 2025-2026 fiscal year.

On the other hand, China's growth rates for this year and next year are expected to be 5.4% and 4.6%, respectively. Although these figures are 0.6 and 0.2 percentage points higher than previous forecasts, S&P warned that ongoing turmoil in the real estate sector continues to pose a threat to China's economy. The sharp decline in new housing demand is directly impacting the economy through difficulties faced by real estate developers in securing cash liquidity and land sales.

Rahul Bajoria, Chief Economist for Barclays India based in Mumbai, told the WSJ, "India's economic growth rate is outperforming global competitors thanks to strong domestic demand, government investment, and consumer sentiment." Recently, the IMF projected that by 2026, India will become the world's third-largest economy, following the United States and China.

S&P lowered the Asia-Pacific region's economic growth forecast for next year, excluding China, from 4.4% to 4.2%, citing energy shocks caused by the Israel-Hamas war and the risk of a hard landing in the US economy.

This content was produced with the assistance of AI translation services.