Markets
Is India the Next China? [Chart]
![Is India the Next China? [Chart]](https://www.visualcapitalist.com/wp-content/uploads/2015/06/india-the-next-china-chart.png)
Is India the Next China? [Chart]
The Chart of the Week is a weekly feature in Visual Capitalist on Fridays.
It’s no secret that the most recent bull market in commodities and global growth corresponded with the emergence of China on the world stage. When a country with over 1 billion people can grow at 10% for decades at a time, the power of compound interest starts to add up.
The only problem is that Chinese growth is starting to slow down. To start 2015, the world’s second-biggest economy grew at its slowest pace in six years at a clip of 7.0%, which was down from 7.3% in Q4 2014. Further, the rate of growth in investment, industrial production, and retail sales have been declining consistently over the last four years.
The world is looking for a new China to be the world’s growth engine. Does India fit the bill?
No one is denying that India has the potential to be a game-changer for the global economy. With 1.25 billion people and growing, India will be the most populous country in the world by 2028. The challenge is that the majority of people in the country are terribly poor (GDP per capita of US$1,500) and that the country’s bureaucracy strangles almost and all business endeavours. That said, there are recent economic and bureaucracy reform green shoots that show that India could at least temporarily swing out of its funk.
We did some back of the envelope calculations to see at what rate India would have to grow to be as significant to the world economy as China is today. We looked at India growing at high (10%), medium (7.5%), and low (5%) rates over the coming years. Based on this, India wouldn’t be comparable to today’s China until 21 years, 31 years, or 57 years respectively. (Note: to keep model simple, we had the rest of the world growing at a steady pace of 2%)
The end result shows the staggering power of compound interest: if India grows at a high rate similar to China over the last decades, India could be a world player in the coming decades. If growth is crippled by bureaucracy and it hovers around 5% on average, India won’t become the next China until way in our future: the year 2072.
On the bright side, Brazil may also be a good “bridge” for global growth. China certainly believes so, and that’s why they just announced an investment of $50 billion into the country’s infrastructure projects.
Economy
Economic Growth Forecasts for G7 and BRICS Countries in 2024
The IMF has released its economic growth forecasts for 2024. How do the G7 and BRICS countries compare?
G7 & BRICS Real GDP Growth Forecasts for 2024
The International Monetary Fund’s (IMF) has released its real gross domestic product (GDP) growth forecasts for 2024, and while global growth is projected to stay steady at 3.2%, various major nations are seeing declining forecasts.
This chart visualizes the 2024 real GDP growth forecasts using data from the IMF’s 2024 World Economic Outlook for G7 and BRICS member nations along with Saudi Arabia, which is still considering an invitation to join the bloc.
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Mixed Economic Growth Prospects for Major Nations in 2024
Economic growth projections by the IMF for major nations are mixed, with the majority of G7 and BRICS countries forecasted to have slower growth in 2024 compared to 2023.
Only three BRICS-invited or member countries, Saudi Arabia, the UAE, and South Africa, have higher projected real GDP growth rates in 2024 than last year.
| Group | Country | Real GDP Growth (2023) | Real GDP Growth (2024P) |
|---|---|---|---|
| G7 | 🇺🇸 U.S. | 2.5% | 2.7% |
| G7 | 🇨🇦 Canada | 1.1% | 1.2% |
| G7 | 🇯🇵 Japan | 1.9% | 0.9% |
| G7 | 🇫🇷 France | 0.9% | 0.7% |
| G7 | 🇮🇹 Italy | 0.9% | 0.7% |
| G7 | 🇬🇧 UK | 0.1% | 0.5% |
| G7 | 🇩🇪 Germany | -0.3% | 0.2% |
| BRICS | 🇮🇳 India | 7.8% | 6.8% |
| BRICS | 🇨🇳 China | 5.2% | 4.6% |
| BRICS | 🇦🇪 UAE | 3.4% | 3.5% |
| BRICS | 🇮🇷 Iran | 4.7% | 3.3% |
| BRICS | 🇷🇺 Russia | 3.6% | 3.2% |
| BRICS | 🇪🇬 Egypt | 3.8% | 3.0% |
| BRICS-invited | 🇸🇦 Saudi Arabia | -0.8% | 2.6% |
| BRICS | 🇧🇷 Brazil | 2.9% | 2.2% |
| BRICS | 🇿🇦 South Africa | 0.6% | 0.9% |
| BRICS | 🇪🇹 Ethiopia | 7.2% | 6.2% |
| 🌍 World | 3.2% | 3.2% |
China and India are forecasted to maintain relatively high growth rates in 2024 at 4.6% and 6.8% respectively, but compared to the previous year, China is growing 0.6 percentage points slower while India is an entire percentage point slower.
On the other hand, four G7 nations are set to grow faster than last year, which includes Germany making its comeback from its negative real GDP growth of -0.3% in 2023.
Faster Growth for BRICS than G7 Nations
Despite mostly lower growth forecasts in 2024 compared to 2023, BRICS nations still have a significantly higher average growth forecast at 3.6% compared to the G7 average of 1%.
While the G7 countries’ combined GDP is around $15 trillion greater than the BRICS nations, with continued higher growth rates and the potential to add more members, BRICS looks likely to overtake the G7 in economic size within two decades.
BRICS Expansion Stutters Before October 2024 Summit
BRICS’ recent expansion has stuttered slightly, as Argentina’s newly-elected president Javier Milei declined its invitation and Saudi Arabia clarified that the country is still considering its invitation and has not joined BRICS yet.
Even with these initial growing pains, South Africa’s Foreign Minister Naledi Pandor told reporters in February that 34 different countries have submitted applications to join the growing BRICS bloc.
Any changes to the group are likely to be announced leading up to or at the 2024 BRICS summit which takes place October 22-24 in Kazan, Russia.
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This visual is part of an exclusive special dispatch for VC+ members which breaks down the key takeaways from the IMF’s 2024 World Economic Outlook.
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