In a historical phase of profound global challenges and redefinition of geopolitical balances, theIndia confirms itself as one of the countries with the most rapid growth in the world. This year it is expected to grow by 6,5%, overtaking China (+5,2%).
This is what stands out SACE in the latest focus “India's moment: “a real chance for the Elephant (and for Italian companies)”. From the thirteenth position occupied in 2000 by size of the economy, the country jumped to fifth in 2022 and is expected to reach third already in 2027. The demographic factor is certainly one of the most relevant factors in the growth equation of India, whose population (1,428 billion) will surpass that of China in 2023.
The growth of India's population
La demography favors the country, which with 1,4 billion inhabitants is today the most populated market in the world. Here the demographic transition is occurring more gradually and over a longer period of time than in the rest of the Asian continent. This is mainly due to a more gradual decline in death and birth rates. Not only that: the growth of the Indian population continue. The country's dependency ratio (i.e. the ratio of people of working age to non-working age people) will be among the lowest among large economies for the next 20 years or so. This provides the opportunity to fine-tune production capacity, continue to grow services and infrastructure.
New outlet for investments
In particular, the workforce is expected to expand until 2032, remaining above 65% of the population until almost 2060. The demographic boom and the increase in disposable incomes will continue to support the expansion of domestic consumption, which in India is worth around 60% of GDP and which in 2031 should reach a value of 5.200 billion dollars, more than double compared to current levels. India's moment also appears to be legitimized by the current process of geoeconomic fragmentation, accelerated by the conflict in Ukraine, and by Western countries' search for greater diversification and reliability of their supply chains. In this context, the country has the unique opportunity to become a outlet market fundamental for investments production in Western countries.
Thanks to favorable demographics, the savings rate of India is expected to increase with the decrease in the dependency ratio, the increase in incomes and the greater development of the financial sector. For all these reasons, there will be an endowment of capital useful for promoting new investments. The transition to green energy also represents a great investment opportunity.
