China's ageing population and rising debt pose a huge challenge for the nation towards its projected $42.2 trillion economy in terms of purchasing power parity (PPP) by 2030, says EY in its latest report.
According to the August 2025 issue of EY Economy Watch, India is uniquely placed when compared to the US, China, Germany and Japan. "The US remains strong but faces high debt levels exceeding 120% of GDP and slower growth rates. Germany and Japan, though advanced, are constrained by high median ages and heavy reliance on global trade. In contrast, India combines youthful demographics, rising domestic demand, and a sustainable fiscal outlook, giving it the most favorable long-term growth trajectory," mentioned the report.
The EY report comes a day after the United States' 50% tariff imposition on Indian exports came into effect.
#KDK | The Indian government has actively responded to the US imposing a 50 percent tariff on its goods. Officials report that negotiations with the US are still possible while also exploring alternative markets for Indian products.
— DD News (@DDNewslive) August 28, 2025
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Terming India as one of the most dynamic among the world’s five largest economies, EY projected that the country may become the world’s second-largest economy in PPP terms by 2038, with a GDP of $34.2 trillion, despite global uncertainties such as tariff pressures and slowing trade.
India's strong economic fundamentals, including high savings and investment rates, favorable demographics, and a sustainable fiscal position, are some of the factors responsible for the feat.
“India’s comparative strengths, its young and skilled workforce, robust saving and investment rates, and relatively sustainable debt profile will help sustain high growth even in a volatile global environment. By building resilience and advancing capabilities in critical technologies, India is well-placed to move closer to its Viksit Bharat aspirations by 2047," said DK Srivastava, Chief Policy Advisor, EY India.
The report also commended reforms such as GST, IBC, financial inclusion through UPI, and production-linked incentives in strengthening competitiveness across industries. Setting the stage for long-term resilience, public investment in infrastructure and adoption of emerging technologies like AI, semiconductors, and renewable energy looks futuristic, as per EY.
