India Slips Two Spots to 7th Position in Global GDP Ranking for 2018

The World Bank data for 2018 showed that India fell two spots in global GDP ranking to seventh place compared with the fifth position it took in the year 2017. The UK and France pipped India this year, cementing their place at the fifth and sixth spots, respectively.

The US remained the largest economy in the world with a GDP of $20.5 trillion, followed by China and Japan, with economy sizes of $13.6 trillion and nearly $5 trillion, respectively.

Germany ($4 trillion), the UK ($2.8 trillion) and France ($2.77 trillion) took the fourth, fifth and sixth positions, respectively. India’s GDP in 2018 was just slightly behind at $2.73 trillion.

Notably, in 2017, India’s GDP was $2.65 trillion, higher than the UK’s $2.64 trillion and France’s $2.5 trillion.

Meanwhile, Italy ($2.1 trillion), Brazil ($1.9 trillion) and Canada ($1.7 trillion) took the eighth, ninth and tenth spots in the global GDP ranking for 2018.

The news of the fall in global GDP ranking comes just a day after rating agency Crisil cut India’s GDP growth estimate to 6.9% for FY20 from 7.1% earlier. The adjustment came amid weak rainfall in June and slowing global growth, with another reason being sluggish economic data for the first quarter.

Dharmakirti Joshi, Chief Economist at Crisil, said: “The crucial question, therefore, is whether a trough is in sight. Given the fiscal constraints, public spending is unlikely to have the heft to pull growth above 7%. And some of the recent, and much-needed, reforms would pay off only over the medium term. There would, therefore, be some near-term onus on monetary policy to stimulate. But how effective that can be is the big question.”

Asian Development Bank, in its Asian Development Outlook 2019 Supplement released in July, had also said that India is expected to grow by 7% in FY20 and 7.2% in FY21, slightly slower than the rate projected in April, because the fiscal 2018 outturn fell short.

Interestingly, the GDP ranking setback comes at a time when India has set itself a target of becoming a $3 trillion economy in the current financial year (FY20) and a $5 trillion economy by 2024, as announced in the Union Budget 2019.