Britain has fallen behind India to become the sixth-largest economy in the world, which is a blow to the government of the UK which is currently struggling with an extreme cost-of-living shock.
In the last three months of 2021, India, a former British colony, surpassed the UK to become the fifth largest economy.
According to the International Monetary Fund, the calculation is made in US dollars. India has extended its lead in quarter one, according to GDP figures.
The UK’s fall in international rankings is a bad backdrop for the new prime minister. Foreign Secretary Liz Truss is expected to defeat Rishi Sunak, former Chancellor of Exchequer.
The winner will be the one to take control of a nation that is experiencing the highest inflation rate in 40 years and a rising risk of a recession, according to the Bank of England. This could continue well into 2024.
The Indian economy, however, is expected to grow by more than 7% this fiscal year. This quarter, Indian stocks have seen a world-beat rebound and their weighting has risen to the second spot on the MSCI Emerging Markets Index. They trail only China.
The Indian economy was $854.7 billion in March quarter cash terms if adjusted for the dollar exchange rate on the last day of each quarter. The UK was $816billion on the same basis.
Calculations were made using historical exchange rates from the Bloomberg terminal and the IMF database.
It is possible that the UK will have fallen even further since. The UK’s GDP increased by 1% in cash terms during the second quarter, and after accounting for inflation, fell by 0.1%. The sterling has also performed poorly relative to the dollar, with the pound dropping 8% this year against the Indian currency.
According to the IMF forecast, India will surpass the UK in dollar terms annually this year. This puts India behind only the US, as well as Germany, Japan, and China. India has ranked 11th on the list of largest economies a decade ago. The UK was 5th.
