India is set to overtake Japan and Germany to become the world's third-largest economy, according to S&P Global and Morgan Stanley.
S&P's forecast is based on the projection that India's annual nominal gross domestic product growth will average 6.3% through 2030.
"India has the conditions in place for an economic boom fueled by offshoring, investment in manufacturing, the energy transition, and the country's advanced digital infrastructure," Morgan Stanley analysts led by Ridham Desai and Girish Acchipalia wrote in the report. "This is a reasonable expectation from India, which has a lot to 'catch up' in terms of economic growth and per capita income," Dhiraj Nim, an economist from Australia and New Zealand Banking Group Research, told CNBC.
Workers processing metal parts at a cookstove manufacturing plant of GHG Reduction Technologies Pvt in Nashik, Maharashtra, India, on Sunday, Nov. 13, 2022.By the same token, Morgan Stanley estimates that Indian manufacturing's share of GDP will "rise from 15.6% of GDP currently to 21% by 2031" — which implies that manufacturing revenue could increase three times from the current $447 billion to around $1,490 billion, according to the bank.
These factors make make India an attractive choice for setting up manufacturing hubs until the end of the decade, she said.Salient sticking points that could challenge Morgan Stanley's forecast include a prolonged global recession, since India is a highly trade-dependent economy with nearly 20% of its output exported.
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