Name: BofA says Covid crisis will delay India overtaking Japan as third-largest economy by 3 years
Brand: cnbc.com
SKU: cnbc-com-420
Availability: OnlineOnly

critic

BofA says Covid crisis will delay India overtaking Japan as third-largest economy by 3 years

preview

Key PointsIndia is set to overtake Japan as the world's third-largest economy behind the U.S. and China by 2031, according to a recent report from BofA Securities.The investment banking division of Bank of America previously predicted it would happen in 2028 but said Monday the economic shock from Covid-19 will push back the timeline by three years."We now expect India to emerge as the third largest economy in the world in 2031/FY32, from 2028 earlier, due to the Covid 19 shock," BofA Securities economists Indranil Sen Gupta and Aastha Gudwani wrote in the report.The researchers noted India should reach Japan's nominal GDP in dollar terms in 2031 if it grows at 9% annually — assuming real GDP growth of around 6%, an average inflation rate of 5% and 2% depreciation. If growth touches 10%, then India can potentially top Japan by 2030, the report said.India suffered an economic crisis due to last year's . Millions of jobs were lost, many of them permanently. While the economy is on the mend, ratings agency S&amp;P said that&nbsp;&nbsp;compared with its pre-pandemic path.Still, structural drivers of economic growth are strengthening, according to the BofA Securities report. They include deepening financial maturity, emergence of mass markets due to rising incomes and a forthcoming demographic dividend, which occurs when . Mass market refers to markets where goods are produced in large quantities for a mass of people.Morgan Stanley is bullish on recovery in Australia, India and Singapore from CovidDeclining birth rates imply there are fewer people to support as they age. Also known as a falling dependency ratio, this trend allows countries to direct scarce resources to other areas that can speed up development. BofA Securities said a rising labor supply will pull India's dependency ratio down in ten years. That is expected to help sustain high saving and investment rates.The report predicted India's skilled labor force would grow as large-scale, Covid-related job and income losses reverse once things return to normal, driven in part by rising employment in the services sector. The credit-to-GDP ratio, which is a proxy for financial maturity, is also expected to rise over the decade while the emergence of mass market is set to push down prices of goods. Two new catalysts are expected to support the structural changes that can lead India's economic growth, according to the report. First, the Reserve Bank of India has built up the country foreign-exchange reserves, which is likely to help stabilize the Indian rupee and prevent large depreciation of the currency during global shocks. It would also see greater portfolio inflows and is set to lower borrowing costs for Indian companies."Further, sustained RBI easing is finally bringing down real lending rates that have been a drag on growth since&nbsp;2016," the economists wrote, adding, "We continue to see financials as the primary beneficiary of&nbsp;the India&nbsp;growth&nbsp;story."A recent uptick in coronavirus cases in India has raised fresh concerns over a second wave of infection even as the country pushes on with its in the current stage.

Key PointsIndia is set to overtake Japan as the world's third-largest economy behind the U.S. and China by 2031, according to a recent report from BofA Securities.The investment banking division of Bank of America previously predicted it would happen in 2028 but said Monday the economic shock from Covid-19 will push back the timeline by three years."We now expect India to emerge as the third largest economy in the world in 2031/FY32, from 2028 earlier, due to the Covid 19 shock," BofA Securities economists Indranil Sen Gupta and Aastha Gudwani wrote in the report.The researchers noted India...

public

Saheli Roy Choudhury

cnbc.com

Credible

Speculation

Anecdotal Evidence

Generalization

Stacking the Deck

Appeal to Authority

Straw Man

Slippery Slope

Emotional Appeal

Red Herring

False Dilemma

Illogical

Moral Equivalency

Ad Hominem

Correlation w/o Causation

Semantics

Begging the Question

Faulty Analogy

Non Sequitur

Bandwagon

Dogmatism

Failing Occam's Razor

Biased

Pure Opinion

Hit Piece

Racial Bias

National Bias

Religious Bias

Financial Incentive

Political Agenda

Gender Bias

Misused Image/Video

Study Misinterpreted

Mistake

Misused Term

Science Misrepresented

Factual Error

Satire

Surface Level

Lack of Reliable Sources

Sensational

Not Credible

Investigative

Balanced

Well Sourced

Great Context

sports

entertainment

U.S.

international

business

technology

science

culture

politics

media

health

BofA says Covid crisis will delay India overtaking Japan as third-largest economy by 3 years

No article scores yet.

CRITIC REVIEWS

PUBLIC REVIEWS