India seen edging out China from top growth spot in 2016

Will India take the lead? Prime Minister Narendra Modi’s goal is to transform the country into a more pro-business economy by slashing red tape and boosting manufacturing. Photo: iStockChina déjà vu all over again while Saudis keep pumpingIndia seen as driving next wave of coal M&A in Australia

Could this be India’s year to shine? With China’s growth targets in doubt, India will stand out for being the only economy in the world to expand more than 7 per cent, according to surveys of Bloomberg economists. China, on the other hand, is enduring the slowest growth in a quarter century and is forecast to expand 6.5 per cent this year. While many of 2016’s economic underachievers will cluster in Latin America and Europe, we now look to Asia and Africa as the motor for global growth this year, accounting for 12 of the 20 best performers. The largest of these – China, India and Indonesia – combined make up more than 17 per cent of global gross domestic product and 40 per cent of the world’s population.

ChindiaThe world’s two most populous nations are in a constant tussle for supremacy. With an economy nearly five times larger than India’s, China remains the true heavyweight. Yet after a rotten start to the year, economists are increasingly zeroing in on its South Asian rival’s growth potential. Prime Minister Narendra Modi’s goal is to transform India into a more pro-business economy by slashing red tape and boosting manufacturing. To spur investment, Reserve Bank of India Governor Raghuram Rajan cut borrowing costs four times last year. Though competitors, China is also India’s largest trade partner, so a slowdown there would hurt exports.

African promiseFor impressive growth, look to Africa with four countries making the cut: Uganda, Nigeria, Kenya and Ghana. Among the 10 African nations surveyed, Uganda emerged as the continent’s best performer with expected growth of 5.6 per cent this year. This in spite of a volatile political landscape ahead of February elections.

Best of the RestIreland is the only euro economy to make the list with growth of 4.1 per cent expected this year. After years of austerity and a bailout, the Celtic Tiger is set to roar again while many of its European peers still struggle. Meanwhile on the other side of the Atlantic, the US is forecast to grow 2.5 per cent in 2016, placing the world’s biggest economy near the top of the field compared to its developed market peers. Neither the US nor other developed economies such as Canada, Germany and Australia made the top growth list, with the world economy expected to expand by around 3.3 per cent.  Current forecasts are the median estimate from each country’s latest survey conducted between October and December 2015, bringing the total number of economies surveyed to 93. Bloomberg

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