India overtakes UK as 5th largest economy in the world

India overtakes UK to become the fifth largest economy. The former British colony went past UK in the final three months of 2021 to become the fifth-biggest economy in the world. The calculation is based in US dollars according to GDP figures of first quarter from the International Monetary Fund.

The Indian economy is forecast to grow more than 7 per cent this year. A world-beating rebound in Indian stocks this quarter has just seen their weighting rise to the second spot in the MSCI Emerging Markets Index, trailing only China’s.

On an adjusted basis and using the dollar exchange rate on the last day of the relevant quarter, the size of the Indian economy in “nominal” cash terms in the quarter through March was $854.7 billion. On the same basis, UK was $816 billion.

The calculations were done using the IMF database and historic exchange rates on the Bloomberg terminal.

The UK is likely to have fallen further since. UK GDP grew just 1 per cent in cash terms in the second quarter and, after adjusting for inflation, shrank 0.1 per cent. Sterling has also underperformed the dollar relative to the rupee, with the pound falling 8 per cent against the Indian currency this year.

The IMF’s own forecasts show India overtaking the UK in dollar terms on an annual basis this year, putting the Asian powerhouse behind just the US, China, Japan and Germany. A decade ago, India ranked 11th among the largest economies, while the UK was 5th.