In a recent report, global credit ratings agency Fitch Ratings has raised India's medium-term potential growth estimate to an impressive 6.2%, up from its previous forecast of 5.5%. This upward revision comes as Fitch lowered the estimate of medium-term potential growth for several emerging markets, citing a reduction in China's supply-side growth potential.
Fitch Ratings highlighted India's significant upgrade, attributing the higher estimate to a swift recovery in the country's labor participation rate post-pandemic. Alongside India, Mexico also experienced an upgrade in its growth outlook, reaching 2.0% from 1.4%.
However, the report also indicated a global shift in economic rankings. According to the International Monetary Fund (IMF), Japan's economy is expected to fall from the third-largest to the fourth-largest globally. The depreciation of the yen and sluggish economic growth have contributed to this decline. Japan's nominal GDP, estimated at around $4.2 trillion, is now anticipated to be lower than Germany's $4.4 trillion, marking the first reversal in their rankings since 1968.
Japan's Economic and Industry Minister addressed the situation, acknowledging the challenges faced by Japan's economy. He emphasized the need for innovation to drive economic development and increase income. Moreover, the IMF's projections indicate that by 2026, India's economy will surpass Japan's, leading to a further decline in Japan's global economic ranking.
These developments underscore the dynamic nature of the global economy, with emerging markets like India showcasing remarkable resilience and growth prospects. As India continues to ascend the global economic ladder, it remains to be seen how these shifts will impact the broader international economic landscape.
Fitch Ratings highlighted India's significant upgrade, attributing the higher estimate to a swift recovery in the country's labor participation rate post-pandemic. Alongside India, Mexico also experienced an upgrade in its growth outlook, reaching 2.0% from 1.4%.
However, the report also indicated a global shift in economic rankings. According to the International Monetary Fund (IMF), Japan's economy is expected to fall from the third-largest to the fourth-largest globally. The depreciation of the yen and sluggish economic growth have contributed to this decline. Japan's nominal GDP, estimated at around $4.2 trillion, is now anticipated to be lower than Germany's $4.4 trillion, marking the first reversal in their rankings since 1968.
Japan's Economic and Industry Minister addressed the situation, acknowledging the challenges faced by Japan's economy. He emphasized the need for innovation to drive economic development and increase income. Moreover, the IMF's projections indicate that by 2026, India's economy will surpass Japan's, leading to a further decline in Japan's global economic ranking.
These developments underscore the dynamic nature of the global economy, with emerging markets like India showcasing remarkable resilience and growth prospects. As India continues to ascend the global economic ladder, it remains to be seen how these shifts will impact the broader international economic landscape.
