Opinion | How India and Southeast Asia can save global growth as US and China stagnate

The global economy has had a pretty good run lately, with 5.5 per cent growth in 2021 after bouncing back from a brief recession two years ago. However, that growth is about to slow dramatically.

There is a Covid-19 pandemic that will not go away. Supply chains are snarled throughout the world. There is a potential military confrontation if Russia invades Ukraine. And now there is the threat of inflation, that insidious destroyer of wealth.

But where will growth come from when the United States and China – two engines of global economic activity for more than a decade – both face serious slowdowns? The US inflation rate is the highest it has been since 1982, when sweatbands were in vogue and Olivia Newton-John’s Physical topped the pop charts.

China’s inflation is on the rise as well and is set to reach a modest, though not insignificant, 1.8 per cent in 2022. Even at that level, it will eat away at dramatically slower growth this year. The International Monetary Fund estimates that the country’s economy will grow only 4.8 per cent in 2022, down roughly 60 per cent from last year’s 8.1 per cent figure.

India is on track to displace the UK as the fifth-largest economy in the world. With GDP expected to grow at 9 per cent this year and with one of the largest populations in the world, the continental giant could also become a major regional hub of economic activity.