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India probably world's third largest economy: OECD

Last updated on: June 1, 2013 14:12 IST

India probably world's third largest economy: OECD

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Aditi Khanna in London


India has probably surpassed Japan to become the world's third largest economy after the US and China, Paris-based think-tank OECD said even as it lowered the country's economic growth projection for 2013 to 5.3 per cent.

"China will likely pass the United States as the world's largest economy in the next few years and India has probably recently surpassed Japan to be third largest," said the OECD Economic Outlook report.

Until around 2020, China is set to have to highest growth rate among major countries, but could be then surpassed by India, it further said.

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Image: Bollywood actress Rani Mukerji with India's national flag.
Photographs: Munish Sharma/Reuters

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OECD also said that by early 2030s, the BRIICS' (Brazil, Russia, India, Indonesia, China and South Africa) combined GDP should roughly equal that of the OECD (based on current membership), compared with just over half that of OECD now.

"Between now and 2060, GDP per capita is seen to increase more than 8-fold in India and 6-fold in Indonesia and China," it added.

The Organisation for Economic Cooperation and Development (OECD), which in November had projected India to grow at 5.9 per cent in 2013, cautioned that structural bottlenecks in the country could further constrain investment and growth potential.

"GDP growth is projected to rise gradually over the next two years... Significantly more growth would be forthcoming if structural bottlenecks were swept away by fundamental structural reforms," the report said.

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Image: Members of the Chinese community with stickers of the Chinese flag stuck on their faces.
Photographs: Bogdan Cristel/Reuters

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Looking ahead, it said India is likely to improve growth to 6.7 per cent next year, after having logged a decade's low of 3.8 per cent in 2012.

OECD said the world real GDP is projected to increase by 3.1 per cent this year and by 4 per cent in 2014.

Across OECD countries, GDP is projected to rise by 1.2 per cent this year improve to 2.3 per cent in 2014. Growth in non-OECD countries will rise by 5.5 per cent this year and 6.2 per cent in 2014.

China, the OECD report said, will likely go past the United States as the world's largest economy in the next few years, and India has "probably recently" surpassed Japan to become the third largest.

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Photographs: Jason Lee/Reuters
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Looking ahead, it said India is likely to improve growth to 6.7 per cent next year, after having logged a decade's low of 3.8 per cent in 2012.

It said the global economy would grow at 3.1 per cent in 2013, and accelerate further to 4 per cent in 2014.

OECD said a poor outlook for the recession-hit euro-zone, which is expected to fall further behind a generally improving US and a rebounding Japan.

The US is projected to expand 1.9 per cent this year and then accelerate to 2.8 per cent in 2014, which would be the country's best rate since 2005.

In contrast, the euro-zone is estimated to remain in recession for a second year.

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Tags: OECD , India , US , Japan

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The OECD is an international organisation comprising 34 member-countries, founded in 1961 to boost economic growth and world trade.

OECD Secretary-General Angel Gurria said supportive monetary policies and a gradual restoration of confidence are at the root of the recovery.

"The global economy is strengthening gradually, but the upturn remains weak and uneven," Gurria said.


Image: OECD Secretary-General Angel Gurria.
Photographs: Tony Gentile/Reuters
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