FX.co ★ India to offset global commodity demand gap left by slowing China

India is set to become one of the fastest-growing economies in the world. Under the new government led by Prime Minister Narendra Modi, the country has seen wide-ranging reforms that could ramp up its economic growth in the coming years. A recent study published by ANZ, the Australian bank, sheds light on India's impressive economic prospects. According to their forecast, India is poised to outpace China in economic growth in the near future. Moreover, the country is projected to become the third largest economy by the end of this decade. These optimistic projections suggest India's demand for commodities is likely to surge, thus making up for some of the commodity demand gap left by China, especially in the energy sector. “India’s demand for commodities is expected to grow rapidly, supported by favorable demographics, urbanization, the expansion of manufacturing and exports, and the build-up of infrastructure,” ANZ analysts wrote. This is undeniably great news for those concerned about the slowing economic growth in China negatively impacting global energy demand. India may easily cover this shortfall and bolster the global economy. India’s annual demand for major commodities like oil, coal, gas, copper, aluminum, and steel could jump by more than 5% by 2030. By contrast, China’s demand for the same goods is predicted to slow to between 1% and 3% during this period. The most prominent pick-up in demand will be for oil and coal. “India will scale up its efforts to decarbonize by 2030, but those efforts may be frustrated by the nation’s rapidly growing energy needs, a significant share of which may still have to be met by fossil fuels,” analysts concluded.