The Global economy – a new world economic order is in the making!
India is likely to become the world’s second-largest economy by 2030, next only to China and overtaking the US, according to Standard Chartered’s long-term forecast released on 8 Jan. The bank also predicts that based on nominal GDP using purchasing power parity exchange rates, China will overtake the US next year. Current emerging markets will likely make up the majority of the 10 biggest economies by 2030.The ranking predicted by the bank in 2030 will be – China, India, The USA, Indonesia, Turkey, Brazil, Egypt, Russia, Japan, Germany.
However, these forecasts may not be fulfilled if the trade war unleashed by President Trump continues. The US is considering removing a trade concession that currently benefits India, named the “Generalized System of Preferences” (GSP), the concession grants India zero tariffs on $5.6 billion of exports to the USA. While President Trump has repeatedly called India out for its high tariffs on US goods, the most recent trigger for withdrawing or scaling back GSP is India’s new ecommerce regulations, which restrict the ways foreign e-tailers like Amazon and Walmart-controlled Flipkart can operate. Those regulations, along with data localization efforts and higher tariffs on electronic products and smartphones on India’s part, have damaged negotiations toward a broader trade package the 2 countries began last year.
These negotiation complications may have negative consequences for the US negotiations with China as well. If the US goes forward with its plans for tariff escalation — which would increase the present 10% tariffs on $200 bn of Chinese goods to 25% — it could be a shock to a Chinese economy that is already struggling with the current trade hostilities.
Meanwhile, however, Lesser Developed Countries (LDCs) are not faring well as the global economy cools. 40% of LDCs registered lower growth rates in 2018 than in 2017 and eight of them grew by less than 2.5 % last year according to the forthcoming UNCTAD report Sustainable Development Trends in the Least Developed Countries 2019, due out later this month.
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