As the government in London struggles to adjust to a harsh cost-of-living shock, Britain has fallen behind India to become the sixth largest economy in the world.
In the final three months of 2021, India outpaced the UK to become the fifth-largest economy. India increased its lead in the first quarter of the computation, which is based on US dollars, according to IMF GDP data.
For the next prime minister, the UK’s slip in global rankings is an unwanted backdrop. On Monday, members of the Conservative Party will elect Boris Johnson’s replacement. Foreign Secretary Liz Truss is predicted to defeat former Chancellor of the Exchequer Rishi Sunak in the final round of voting.
The winning candidate would lead a country that is experiencing its highest rate of inflation in four decades as well as growing chances of a recession that the Bank of England predicts could stretch well into 2024.
The Indian economy, on the other hand, is anticipated to expand by more than 7% this year. Indian stocks have recently had a global-beating recovery, moving their weighting into second place in the MSCI Emerging Markets Index, only behind China’s.
The size of the Indian economy, on an adjusted basis and using the dollar exchange rate on the last day of the relevant quarter, was $854.7 billion from January through March. UK was $816 billion on the same basis.
The computations were performed on the Bloomberg terminal using historical exchange rates and the IMF database.
Since then, the UK has likely declined even more. In the second quarter, the UK’s GDP increased by only 1% in nominal terms and by 0.1% after accounting for inflation. With the pound losing 8% against the rupee this year, sterling has underperformed the dollar relative to the Indian currency.
According to the IMF’s own projections, India will surpass the UK in dollar terms annually this year, leaving the Asian giant just behind the US, China, Japan, and Germany. India was the eleventh-largest economy ten years ago, while the UK was the fifth-largest.