China and India, together with Russia, Brazil and South Africa were collectively known as the BRICS group of emerging economies that were set to expand considerably and take a seat at the top table of economic powers prior to the Global Financial Crisis. Whilst the world struggles to shrug off weak demand and weak growth in the long tail of the crisis, discussion of these economies as a future powerhouse for global expansion has been consigned to history. Nevertheless, China has become well established as the world’s second largest economy. Such is its importance that a perceived slowing of China’s more than impressive rate of expansion is enough to send global markets into a tailspin.
Data just released by Indian authorities suggest that the world’s most populace democracy managed to grow at a faster rate than China in Q4 2015 with growth of 7.3% compared to China’s 6.9%. India is predicting that full year growth (based on the fiscal year to April) will come in at 7.6%. India is Asia’s third largest economy behind China and Japan (analysts expect the Japanese economy to have contracted in Q4). Whilst Japan remains the world’s third largest economy, India ranks as the seventh largest on the basis of the nominal value of GDP in Dollars.
The Indian economy is roughly one fifth of the size of the Chinese economy and half the size of the Japanese economy, so whilst the rate of expansion may well have surpassed that of China, the absolute increase in the value of the Indian economy is only a fraction of that of China. Roughly, Q4 saw the value of the Indian economy increase by $160 billion whereas China’s increase was approximately $790 billion – nearly five times more. Whilst GDP growth figures are always given as percentages, it is sometimes instructive to look behind the headlines at the underlying Dollar values that these figures relate to.