India to contribute 12.2% to global economic growth by 2020
Study conducted by Economist Intelligence Unit (EIU) shows India will rival bigger European markets by 2020
India, June 24, 2006 - By the year 2020 India, China and the US will jointly contribute USD 1 trillion to the global economy, according to a study "Foresight 2020" conducted by the Economist Intelligence Unit (EIU) and sponsored by Cisco. The next fifteen years will see significant outpacing by Asia and particularly the powerhouses of India and China of the rest of the world in gross domestic product (GDP), wages and consuming power. India will contribute 12.2% to global economic growth by 2020.
The study projects the continued rapid growth of India as one of the fastest growing economies. By 2020 India as a trading nation will record the biggest jump in world ranking-from 24th to 10th. Propelled by fast growth in India and China, Asia will increase its slice of the world's GDP from 35% in 2005 to 43% by 2020. India's share in the global GDP will rise from 6.2% in 2005 to 8.8% in 2020.
Developing Asia will account for two-thirds of the increase in employment growth, with India alone making up 30% of the net increase in global employment with 142 million new jobs.
World's consumer spending will expand at an annual rate of 5.6% to US$ 62 trillion by 2020 compared to US$ 27 trillion today. Though US will continue to be the largest consumer market, China will emerge as the world's second largest consumer market and India will rival the bigger European markets. India's share in world consumer spending will increase from 1.9% in 2005 to 3.1% in 2020.
India's growing integration with the global economy and its favourable demographics are likely to ensure a sustained rate of growth of 5.9% a year in 2006-20. India's democracy is well entrenched; its legal system is generally impartial, if slow-moving, and its constitution is respected. However, India's much-discussed IT sector accounts for too small a share of GDP to be a long-term driver of growth. Much more will depend on the modernisation of the country's agriculture and manufacturing.
Specifically the study found that tailored customer experiences will play a critical role in economic success. Companies will differentiate themselves and create competitive advantage by creating high touch customer experiences through customization of products and quality of customer services.
"The rapid growth of India as reflected in this survey is already apparent in the evolving and complex needs of our customers in the Indian market," said Ranajoy Punja, Vice President-Marketing, for Cisco. "As production processes and transactions become more commoditized and automated, value with customers lies in hard-to-replicate personal relationships and interactions. These interactions will be heightened by collaboration, high-value services and knowledge workers all enabled by technology."
"Knowledge workers combined with IT can change customer experiences. Companies that can collaborate globally to create the customer experience will win the competitive battleground."
The EIU surveyed 1,656 executives from 100 countries and conducted in-depth interviews with executives, analysts and policy makers in late 2005.
Key findings of the study include:
- Economic growth is expected to remain robust over the next 15 years with India, China and the United States accounting for more than 50 percent of all new growth. Overall, both India and China's GDP will grow at an annualized rate of 6.0 percent
- 471 million net new workers will enter the global workforce, with India accounting for a remarkable 142.4 million, followed by China with 65 million and the United States with 12.5 million new workers. The European Union (EU) will experience a growth of 8.4 million workers. The overwhelming majority of new U.S. and EU jobs will be in the service industry
- By 2020 China's GDP (at PPP) will have matched the US and the EU. Indias GDP will have overtaken or be on the threshold of overtaking the biggest European economies. But most of Asia-including both China and India-will remain very much developing countries in 2020. Average GDP per head will still be less than one-fifth that of the US, compared with one seventh in 2005.
- From being the manufacturing center of the world, about 66 percent of those surveyed believed the Asia Pacific region would see its workers evolving to knowledge workers - occupying complex, knowledge-based roles that required developed communication and judgment skills. In order to groom employees to occupy such roles, those surveyed said they would most likely use training (38%) and IT (41%).
- While price and quality will continue to matter, more than 90 percent of those surveyed believe the importance of the personalization of services will increase dramatically as interactions and customization become vital components of both customer service and worker behavior.
- The nature of the workforce will continue to change. 56% of executives in Asia Pacific expect more efficient organizations in which independent decision-making and collaborative environments will be the norm. These changes will require a new approach to organizational management and human relations. Customers and suppliers will become more involved in product development, cross-functional and cross border teams will work together more frequently and partnerships with other organisations will proliferate.
About the Survey:
The Foresight 2020 study was conducted in late 2005 in order to understand long-term demographic, economic and corporate trends and assess likely changes to the global economy. The study covered eight key industries - automotive, consumer goods & retailing, energy, financial services, healthcare & pharmaceuticals, manufacturing, public sector and telecoms.
The EIU surveyed 1,656 executives in over 100 countries. Nearly a third of those surveyed were CEO level. Respondents were spread fairly equally from Asia-Pacific (30 percent), Western and Eastern Europe (34 percent) and North America (27 percent). The study findings can be found at www.cisco.com/go/foresight2020.
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