India will turn the third largest importer by 2050 with a share of 5.9 per cent of global imports, right behind China and the United States, and with a share of 6.8 per cent in global gross domestic product (GDP), according to the latest Global Trade Outlook released by the UK department of international trade.
The centre of economic gravity has been shifting eastward for decades due to the rapid growth in Indo-Pacific, causing trade patterns to shift as it moves, it said.
At present, India is ranked eighth among largest importing nations with a 2.8 per cent import share and is set to become the fourth largest importer by 2030. It is ranked fifth in size of world’s economies with a share of 3.3 per cent. India’s GDP is projected to cross Germany by 2030 to become the fourth largest economy.
“The US’s and the EU’s share of most import sectors is expected to decline out to 2030 as the growing purchasing power of Asia’s middle-class accounts for a rising share of global import demand. This change is particularly marked in the food, travel and digital services sectors where larger and increasingly wealthy populations in the Indo Pacific are expected to consume more discretionary goods and services,” the document said.
“Between 2019 and 2050, 56 per cent of global growth is expected to come from the Indo-Pacific, compared with a quarter from the EU and North America combined. Growth within the Indo Pacific is also expected to rebalance over time, with South Asia’s contribution (driven by India) rising,” it added.
China is a major driver of this eastward economic shift as it is expected to become the world’s largest economy by 2030. China already displaced the US in purchasing power parity (PPP) terms (which account for differences in local prices) in the mid-2010s. But based on market exchange rates, which are more relevant for trade, the change is expected to happen around 2030. “At that point, both countries will account for around 22 per cent of global GDP,” the report said.
“The role of emerging economies in the trading system will rise over time, consistent with their growing weight in the global economy,” the report added.
