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| India displaces Japan to become third-largest world economy |
India has displaced Japan to become the world’s third biggest economy in terms of purchasing power parity (PPP), as two GCC countries were ranked among the richest in terms of per capita gross domestic product, according to the latest World Bank report.
The 2011 round of the bank’s International Comparison Programme (ICP) ranked India after the US and China. The last survey in 2005 had placed the country on 10th place.
According to the report released in Washington, the size of Indian economy in terms of purchasing power parity grew to $5.75 trillion in 2011 surpassing Japan, which had $4.37 trillion economy.
In the latest ranking, India’s economy was 37.1 per cent of the US economy compared with 18.9 per cent in 2005.
Qatar, Macao, Luxembourg, Kuwait and Brunei were richest countries, or those with the highest gross domestic product (GDP) per capita on a PPP basis, which is used to compare economies and incomes of people by adjusting for differences in prices in different countries to make a meaningful comparison.
The United States remained the world’s largest economy (in 2011), but it was closely followed by China, once data was adjusted for comparison on a standard basis, the World Bank said on Wednesday.
Gross domestic product by the US in 2011 amounted to $15.533 trillion, over twice of China’s $7.321 trillion. But after a PPP-method adjustment, the figure for China rose to $13.495 trillion, breathing down the neck of the US which has dominated the world economy for over a century.
Switzerland and Norway are the world’s most expensive economies, followed by Bermuda, Australia and Denmark, according to a new ranking by the World Bank.
The economies with the lowest prices are Egypt, Pakistan, Myanmar, Ethiopia and Laos, according to a review of economic data, which seeks to compensate for exchange rate effects and measure spending power across countries. The United States, the world’s largest economy, was in relatively affordable 25th place, lower than most other high-income countries.
A recent World Bank report said Indian growth would be the strongest among major developing economies between 2013 and 2016.
For 2013, the estimated growth rate for India by World Bank was just 4.8 per cent, but the coming years will see a rapid acceleration. By 2016, the Indian economy is expected to grow by 7.1 per cent, a full 2.3 percentage points over the current rate. The inevitable comparison with China shows India almost catching up with China. By 2016, the gap between the rates of growth of the two major developing economies would have narrowed down considerably to just 0.4 per cent compared with the 3.1 per cent gap in 2014.
Eight countries, including Malawi, Mozambique and Liberia, had GDP per capita of less than $1,000. Almost half the world’s $90.6 trillion in total economic output in 2011 came from low- and middle-income countries, the World Bank said.
Compared to the last time the exercise was done in 2005, with a slightly different methodology and mix of countries, middle-income countries gained a bigger share of the world economy, at the expense of both high- and low-income peers.
“The United States remained the world’s largest economy, but it was closely followed by China when measured using PPPs. India was now the world’s third largest economy, moving ahead of Japan,” the report said.
The World Bank, explaining the higher raking for India on the PPP measure, noted that despite high inflation in India in recent years, prices in the country are still well below those in advanced economies.
However, according to the International Monetary Fund, India’s economy is 12th largest and only about a third of Japan’s in terms of absolute unadjusted dollars. “The economies with the lowest prices are either in Africa or Asia and the Pacific and include India, which has the third-largest economy,” the report noted.
