India Set To Surpass Japan And Germany To Become Third Largest Economy By 2027: Jefferies

Jefferies, a global investment banking firm, has predicted that India's GDP will surge to $5 trillion within the next four years, positioning it to surpass Japan and Germany and become the world's third-largest economy by 2027.

The report mentioned that India's ascent from the ninth-largest to the fifth-largest economy over the past decade underscores its robust growth potential.

"On a PPP basis, the GDP is already much higher at $13.2 trillion, making it the third largest economy in the world," the Jefferies said.

The report said that despite facing headwinds from significant reforms such as the bankruptcy law, GST implementation, Real Estate Regulation Act (RERA), and demonetization, India's GDP has continued to expand.

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Jefferies acknowledged that while these reforms may have temporarily impacted growth, they are ultimately beneficial for the country's long-term economic health.

"India is not only projected to grow at 6 per cent over the next five years, the country will also be a standout in a world where most large economies are expected to see their growth rates decline.

We believe that rising growth outperformance, particularly against the developed world, should help India climb up the world's GDP ranks quickly to the third spot before this decade ends," Jefferies said.

India’s market cap is currently the 5th largest globally ($4.5 trn) but India’s weight in global indices is still low at 1.6 per cent (10th rank).

“This should change as market free float rises and some weight anomalies get sorted out. Assuming market returns in line with the last 15-20 year history and new listings, India will become nearly a $10 trn market by 2030 - impossible for large global investors to ignore,” the report added.

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