Monday, September 19, 2022

Media Review: India's economy has surpassed that of the United Kingdom in terms of size, making it the fifth largest in the world

    Monday, September 19, 2022   No comments

India succeeded this year by taking advantage of the events surrounding it and getting as far as possible from the war in Ukraine and the sanctions imposed by European countries on Russia, so that its economy exceeded the United Kingdom and made it the fifth largest economy, knowing that this transgression is not the first time, as India, the former British colony, has already emerged as the fifth The strongest economy in the world, surpassing Britain and France in 2019, according to a report by the World Population Review Center, based in the British capital, London.

Weeks ago, the International Monetary Fund revealed in its latest figures that just a decade ago, India's GDP was the eleventh in the world, but with 7% growth expected for 2022, India's economy has surpassed that of the United Kingdom in terms of size .


According to the International Monetary Fund, the growth of the Indian economy was accompanied by a period of rapid inflation in the United Kingdom, which led to a cost-of-living crisis and the risk of a recession, according to what the Bank of England predicted.


The IMF also explained that this situation, along with a turbulent political period and Brexit, led to Indian production exceeding the United Kingdom in the last quarter of 2021, with the first of 2022 offering no change in the arrangement.


Looking ahead, the International Monetary Fund expects India to overtake the UK more until 2027, making India the fourth largest economy by then, and leaving the UK in sixth place.


On an adjusted basis, using the dollar exchange rate on the last day of the first quarter, India's economy in "nominal" monetary terms in the quarter ending March was $854.7 billion. On the same basis, the UK economy was at $816 billion.

Reasons for the growth of the Indian economy

And the newspaper "The Guardian" revealed that one of the main reasons for the rise of India's economy is its ability to develop its manufacturing sector.


The newspaper considered that India has already benefited from a large educated middle class, which contributed to the development of the information technology and pharmaceutical sectors on a global level.


It also has strong consumer demand, which accounts for about 55 percent of the economy, compared to less than 40 percent in China, according to the newspaper.


Indian President Modi's market reforms, which included lowering the corporate tax from 35% to 25%, and opening India to more foreign investment, have also contributed to the liberalization of entrepreneurs.


The same context was reported by the American newspaper "The New York Times", which attributed this growth to a set of government policies, including increased public investment, forgiveness for debtors, credit guarantees that helped keep inflation relatively under control, and time the public from economic shocks.


Good relations with Moscow and Brussels in the service of the economy

In the same article, The New York Times noted that India's purchase of discounted oil from Russia, contrary to the wishes of Western allies, helped prevent the country's energy prices from rising.


India's neutral stance on the war in Ukraine has also allowed the volume of trade between India and Russia to rise by nearly 120% this year, according to Russian Presidential Aide Yuri Ushakov.


Indian Ambassador in Moscow Pavan Kapoor also noted that the volume of trade between Russia and India has been growing in size and scope in recent months. He added that companies in both countries are working to overcome obstacles to closer cooperation posed by sanctions.


India has moved towards enhancing exchange with partner countries using local currencies, which will strengthen its currency, and is currently working with Moscow on taking bilateral measures to expand the use of national currencies in mutual settlements.


Likewise, India has boosted its purchases of Russian crude over the past six months, while the United States has repeatedly urged New Delhi to support setting a price ceiling for Russian oil, which the latter has not agreed to.


Data in July showed that India's imports of crude oil from Russia jumped to a record level of about 950,000 barrels per day in June, which constitutes about 20% of the total imports of the third largest consumer of crude in the world.


On the other hand, India decided, in June, to resume negotiations with the European Union after a 9-year hiatus, with the aim of concluding a free trade agreement at the end of 2023.


The European Union is India's third largest trading partner, and the value of exchanges between them amounted to about 120 billion euros in 2021.


Britain retreat

The decline in Britain's global ranking, according to the "Bloomberg" website, is an uncomfortable development for Prime Minister Liz Truss, whose country is facing the highest inflation rate in four decades, with the risks of economic recession rising.


The latest official data showed that the British economy grew less than expected in July, raising the risk that the country may have already entered a recession, with demand for electricity falling due to a sharp rise in energy fees, and the construction sector affected by a jump in the cost of raw materials.


Warnings of recession, inflation and economic problems in Britain continue daily, and recently, for example, British government experts warned that the country would plunge into a deeper energy crisis, within a year, without an immediate plan to improve homes and dramatically reduce demand for gas.


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