The International Monetary Fund (IMF) and the World Bank recently released figures on the growth expectations of some the fastest growing nations. India remarkably topped the charts and in fact is expected to overtake China as the fastest growing economy by 2016.
According to the estimated numbers of IMF and World Bank, India’s growth will rise to 7.5% in 2015 from 7.2% in 2014. While the IMF expects the Indian economy to grow by a further 7.5% in 2016, the World Bank pegs India’s growth a little higher at 7.9%.
China on the other hand is expected to grow by only 6.8% in 2015 from 7.4% in 2014, say IMF annual growth figures. It further estimates the growth in China to slow down to 6.3% by 2016. Similarly, figures furnished by World Bank see China’s growth slowing down to 7.1% in 2015 from 7.4% in 2014 and a slowdown in growth in 2016 to 7%.
The reason for this spurt in growth in the Indian economy is expected to be on the back of two main trends i.e. the contained crude oil prices and secondly the reform programme by the government which they believe if implemented fully can unlock investment and boost productivity. The World Bank had further mentioned much of this was a result of the pickup in output which will be reflected in an expansion of the industrial sector in response to several reform measures, which could improve the business environment and ease regulatory constraints. Some of these reforms include the introduction of GST (goods and service tax), single-window clearance for registration and land acquisition reforms.
While expectations of India’s growth are high, China growth is expected to slow down as a result of continued measures to contain local government debt, contain shadow banking, reduce excess capacity, curb energy demand and control pollution. As a result this is expected to reduce investment and manufacturing growth in China. The Asian giant is also looking to rebalance its economy away from investment and heavy industry.
Though India’s growth rate is expected to be higher than China, India’s GDP at $2 trillion will remain much smaller in comparison to China’s $10 trillion economy.
The US is projected to grow by 3.1% in 2015 from 2.4% in 2014 and further see a 3.1% growth in 2016 say IMF figures. While the Euro Zone which grew by 0.9% in 2014 is expected to grow by 1.5% in 2015 and 1.6% by 2016. The global economy is expected to marginally increase in 2015 to 3.5% in 2015 from 3.4% in 2014. It is however expected to see a larger rise in to 2016 at 3.8%.
With India expected to be the fastest economy and even outpacing China, growth in other sectors in India apart from manufacturing industry are expected to benefit as a result of the trickledown effect. As production shifts into high gear and easing of inflation due to subdued oil prices, we can expect consumer spending to go up. If this is to happen, we can expect the marketing and advertising spends of brands to go up significantly in 2015 and 2016. While the Pitch-Madison Advertising Outlook 2015 report expects growth in adverting to be at 9.6%, GroupM expects India’s adex to rise by 12.6%. Other media agencies have given similar estimates on India’s expected growth. With the Indian economy expected to grow the fastest in 2015, will we see a higher revision in advertising ad spend estimates?