India Set to Overtake China as Word’s Fastest-Growing Economy

Following a revision of growth projections after the fourth quarter of 2015, India is now set to replace China as the world’s fastest-growing economy in the 2016 fiscal year. Though China’s economy is still growing rapidly, it has slowed to its lowest point in years, while India’s economy has continued to prosper.

According to the new growth projections, the Indian economy is expected to expand by 7.4 percent in the coming year, with tentative projections of the 2017 year suggesting that it might have a second year of 7.3 percent growth. By comparison, China’s economy is expected to grow by no more than 6.5 percent in 2016, with a lower rate of 6.2 percent the year after. India’s developing economy, long in the shadow of the more developed Chinese economy, has finally reached a point of growth that would allow it to surpass its northern neighbor.

Though China’s economy is flagging, both countries are expected to beat total global economic expansion in the coming years. At present, it is estimated that the global economy will grow by no more than 3 percent in 2016, meaning that both of the Asian nations will more than double the average world growth rate. Other emerging market economies, such as Brazil, are experiencing economic contraction in the wake of the collapse of commodity prices in 2015. India and China, whose economies are more diversified into manufacturing and service provision, have fared better than those that rely on natural resources for their prime source of revenue.

Chief among the reasons that India has flourished during this difficult economic time is the effort that Prime Minister Narendra Modi has put into attracting foreign investment to his shores. Foreign visits for the Indian prime minister tend to focus more on meeting with business leaders than on diplomatic relations. Mr. Modi, however, will still have to bring in enough foreign investment to build up India’s archaic infrastructure, widely seen as one of its biggest obstacles to continued modernization and industrialization. Much progress has already been made toward securing the investment necessary for the large infrastructure projects though it will be some time before the full effect of them on the Indian economy can be realized.