In an insightful report, HSBC Holdings Plc has cast doubt on India’s capacity to dethrone China as the primary driving force of the global economy in the foreseeable future. Economists Frederic Neumann and Justin Feng contend that India is currently “running on too few cylinders,” while China’s colossal presence in the world economy remains virtually unparalleled.
HSBC’s projections imply that the chasm between the two economic giants will continue to widen, with estimates suggesting an expansion to $17.5 trillion by 2028, based on IMF forecasts. This staggering figure mirrors the current size of the European Union’s economy, starkly contrasting the $15 trillion disparity recorded just last year.
This stance adopted by HSBC stands in stark contrast to the optimistic outlook offered by some, such as Barclays Plc., which posited earlier this week that India’s consistent 8% growth could eventually propel it past China as the globe’s premier growth catalyst in the coming five years.
HSBC’s report further emphasizes disparities in consumption and investment trends between these two Asian behemoths. The analysts postulate that even if China were to experience zero growth, and India’s investment spending were to triple its recent average rate, it would take another 18 years before India’s investment spending aligns with that of China. Presently, China commands roughly 30% of global investment, while India’s share hovers below 5%. Additionally, India’s slice of the global consumption pie remains below 4%, in sharp contrast to Beijing’s commanding 14%.
Nonetheless, HSBC remains optimistic about India’s role in shaping global demand for commodities, consumption, and capital goods. The bank predicts India’s emergence as a significantly larger player in international trade, possibly rivaling China’s prominence in the field of goods supply chains.
The International Monetary Fund (IMF) foresees India’s economy growing at a robust 6.3% in 2023 and 2024, while China is expected to exhibit growth rates of 5% and 4.2%, respectively, during the same period.
This divergence in perspectives underscores the complex and dynamic nature of the global economic landscape, where India’s ascent, while noteworthy, might not be sufficient to displace China’s formidable influence anytime soon.
