Britain trails India to become the world’s sixth-largest economy, dealing a further blow to London’s government as it grapples with a brutal cost of living shock.
India overtook the UK in the last three months of 2021 to become the fifth largest economy. Calculations are based on US dollars, and according to International Monetary Fund GDP figures, India extended its lead in the first quarter.
Britain’s decline in international rankings is an unwelcome backdrop for the new prime minister. Members of the Conservative Party will choose Boris Johnson’s successor on Monday, with Foreign Minister Liz Truss expected to defeat former Finance Minister Rishi Sunak in a runoff vote.
The winner will inherit the country facing the fastest inflation in 40 years and the risk of a recession that the Bank of England says could last until 2024.
By contrast, the Indian economy is projected to grow by more than 7% this year. A global rebound in Indian stocks this quarter lifted him to the second spot on the MSCI Emerging Markets Index, placing him second only to China.
On an adjusted basis and using the relevant quarter-end dollar exchange rates, the size of the Indian economy in ‘nominal’ cash equivalents for the quarter to March was $854.7 billion. By the same standards, the UK was her $816 billion.
Calculations were made using historical exchange rates from the IMF database and Bloomberg terminals.
After that, the UK is likely to fall further. UK GDP grew by just 1% in cash terms in the second quarter, and he contracted by 0.1% when adjusted for inflation. The pound has also underperformed the dollar against the rupee and the pound has fallen 8% against the Indian currency this year.
According to the IMF’s own projections, India will overtake the UK on an annualized basis this year on a dollar basis, making it the Asian powerhouse behind the US, China, Japan and Germany. Ten years ago, India was the largest economy where she ranked 11th and the UK was her 5th.