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The Actuary The magazine of the Institute & Faculty of Actuaries

India and France to overtake UK in GDP rankings

Both India and France are likely to overtake the UK in the rankings of the world’s largest economies next year, with Britain falling from fifth to seventh place.

India to continue rising up GDP rankings ©iStock
India to continue rising up GDP rankings ©iStock

That is the latest forecast from PricewaterhouseCoopers (PwC), which said India – the fastest growing large economy in the world – should expect its climb up the rankings to be permanent.

The firm forecasts GDP growth of 1.6% for the UK in 2019, compared with 1.7% in France and 7.6% for India, although the global economy as a whole is expected to slow.

PwC senior economist, Mike Jakeman, said India’s large population, favourable demographics and low initial GDP per head make it “all but certain” to continue rising up the GDP table.

On France and the UK, he said: “Subdued growth in the UK is likely to tip the balance in France’s favour. The relative strength of the euro against the pound is an important factor.”

PwC also said the pick up in growth seen between 2016 and 2018 in the global economy is “now over”, with an initial boost from fiscal stimulus in the US expected to fade.

In addition, the firm predicts GDP growth in the US to fall from 2.8% to 2.3% in 2019 as higher interest rates dampen consumer spending and a strong dollar hits exports.

Growth in China is also expected to slow as the country attempts to control its debt levels and US tariffs continue to bite.

As for labour markets, PwC forecasts unemployment to fall further, even if job creation slows, pushing up wages, but causing problems for businesses looking to fill talent shortages.

“Last year, the big economic news was centred around advanced economies creating around 4.5 million jobs,” PwC senior economist, Barret Kupelian, said.

“We expect this trend to gradually moderate in 2019, with some economies like the US and Germany hitting structural floors in their unemployment rates, and wage growth starting to pick up.

“Assuming an orderly Brexit, we expect the UK to also see unemployment flattening off, though a disorderly Brexit could lead to a marked rise of unemployment.” 

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