India Surpasses China as the World’s Fastest-Growing Economy
India’s Economic Growth Surpasses China
India has emerged as the world’s most populous nation and the fastest-growing large economy, surpassing China. This remarkable achievement can be attributed to India’s thriving consumer market and its young and dynamic workforce. In contrast, China is grappling with a property crisis, leading to a projected growth rate of only 4.4% for next year, marking its weakest performance since 1990, excluding the pandemic period.
Investor Shift from China to India
Global investors are redirecting their focus from China to India, anticipating higher returns. JPMorgan’s estimates indicate that approximately half of the $250bn-$300bn invested in Chinese bonds since 2019 has been withdrawn, and foreign ownership of Chinese equities has decreased by over $100bn. On the other hand, India has attracted $15.5bn in foreign equity inflows during the first eight months of this year.
India’s Inclusion in the Emerging Market Bond Index
India’s upcoming inclusion in the emerging market bond index is expected to draw $30bn of foreign inflows into its government bond market. Anuj Arora, CIO at JPMorgan Asset Management, highlights India’s economic advantages when compared to China’s economic difficulties.
India’s Demographic Advantage and Investment Opportunities
India’s demographic advantage is predicted to fuel a surge in consumption from $2tn in 2022 to $4.9tn by 2030, surpassing China. Investors can tap into India’s thriving economy through ETFs such as the US-listed $6bn iShares MSCI India ETF or its $2.3bn Ucits version available in 16 European countries.
Challenges and Long-Term Trends
However, concerns persist that India’s growth may already be reflected in its assets. The iShares MSCI India ETF has delivered impressive returns of 8.4% over the past year, 48.9% over five years, and 126.6% over the past decade. Foreign investment faces challenges in Indian stocks due to capital gains tax and foreign ownership limits. Despite these hurdles, long-term trends indicate a favorable outlook for India’s economic rise.
This article was generated with the support of AI and reviewed by an editor.
