India overtakes UK, now world’s fifth-largest economy

India has overtaken the United Kingdom as the fifth largest economy in the world as the European giant continues to suffer the scorching impact of inflation, data from the International Monetary Fund (IMF) has revealed.

UK’s fall behind India is another blow to the government in London as it continues to deal with the harsh cost-of-living occasioned by current inflation rocking the country. 

In the final three months of 2021, the former British colony overtook the UK as fifth-largest economy, according to GDP figures from the IMF, which are based in US dollars.

Inflation in the UK reached a new 40-year high in July, as spiralling food and energy prices exacerbated the country’s historic squeeze on households.

The Bank of England has raised interest rates six times in a row to contain inflation. In August, it raised rates by the most since 1995 and forecasts that the UK will experience its longest recession since the global financial crisis in the fourth quarter of the year.

The Indian economy, on the other hand, is anticipated to expand by more than 7 per cent this year. Indian stocks have recently experienced a global-beating recovery, moving their weight into second place in the MSCI Emerging Markets Index, just behind China’s.

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

The calculations were l based on the IMF database and historical exchange rates on the Bloomberg terminal.

According to the IMF, India will overtake the United Kingdom in dollar terms this year, putting the Asian powerhouse behind only the United States, China, Japan, and Germany.

A decade ago, India was ranked 11th among the world’s largest economies, while the United Kingdom was ranked fifth.