India, China, and Global Economy
First Published: ADawnJournal.com February 3, 2010
While the global recession has just come to an end, and some nations are starting to dig their way out of financial distress, the economies of India and China continued to grow while most others were bogged down.
Some economists even point out that India and China are leading the way and doing more than their share when it comes to boosting the global recovery. Many of them also predict that China will eventually take over from the United States as the world’s economic superpower sometime during the next 10 years.
That doesn’t really come as much of a surprise to the man on the street though, but what may be a shocker is that India may also soon overtake the mighty U.S. However, while the two up and comers are become big players in the global economic game, they are achieving it in with a different set of skills and under dissimilar governments.
At present, most economists will agree that when it comes to the top tier of global economic standing, the U.S. leads Japan and China. According to the CIA World Fact book, the GDP (gross domestic product) in 2008 showed the U.S. at US $14 trillion, Japan at $5 trillion and China $4.4 at trillion. However, India has cracked the top 2$1.20 and sat at number 12 on the 2008 list at trillion.
While China may be growing pretty rapidly, it’s still got a long journey ahead before it catches up to America. And from these figures, that would appear it might take decades. However, the key point to remember is that while the economies of China and India are still growing, the rest of the nations’ GDP around the world has certainly stalled or at least slowed down for the time being due to the recession.
When a country’s economy is considered to be strong, its citizens often spend their money on big-ticket items such as homes and automobiles. However, when a recession hits and the economy is weakened, people hang on to their money and these types of purchases are postponed, especially when jobs are being lost. This can clearly be seen over the past couple of years in the U.S.
But the citizens of China are spending their hard-earned money at a high rate and it’s predicted that by next year China will surpass America when it comes to car sales. The recent recall of millions of Toyota automobiles and the temporary halt of production in North America will also hurt American sales.
It is estimated that China’s growth rate averages between seven and eight per cent, while the U.S. predicted growth is just over one percent. If these numbers are accurate, sooner or later China will pass the leader in our lifetime.
It also looks like India will soon become a major player as its growth rate looks pretty high for the next few years. While the nations’ GDP is well below the U.S. and China at the moment, it has one of the largest populations in the world. And considering the comparatively low wages and areas of poverty, India’s GDP is quite impressive.
However, India’s economy is mainly based on services instead of goods and its economy has the potential for great growth because of its population and excellent knowledge base. In fact, many economists predict that India will be among the top economies of the world by the year 2020.