India: the new China?
The Chinese economy continues to weaken, which among other things is becoming clear because of the sharp fall in both imports and exports. The country faces a difficult task, and the Government in Beijing needs to rapidly boost consumption to compensate for a decrease in the export of manufacturing products. The Chinese people should therefore consume more to keep their economy growing at a satisfying pace. The growth of the Chinese Gross Domestic Product has fallen back below the level of 7 percent, where a few years ago growth of around 10 percent was still being recorded. China risks losing its role of growth engine of the world economy. But there is another country ready to take over that role and that is India. The economic growth of India is one of the strongest in the world. There is still a lot of growth potential thanks to different structural growth factors. Amongst others are population growth, production improvements and the announced economic reforms.
Indiaas the new growth champion
Arvind Subramanian, an economist and adviser to the Indian Government, believes in a golden future for his country in the years to come. He expects the economy will grow 8 to 10 percent on an annual basis over the next 2 to 5 years. The country is evidently not that much affected by the slowing world economy. Federalism, combined with structural reforms, will accelerate the growth rate of the Indian economy. Now China is losing ground, India will no doubt begin to emerge as the new growth champion.
Each of the BRICS countries goes its own way
A few years ago much was expected from the BRICS countries economically (Brasil, Russia, India, China) and now along with South Africa, but the high hopes for these countries were never fully realised. The growth stories of these 5 countries seem more and more different, each country going its own way. Brasil is an economy that, according to Newton Investment Management, better be avoided, while Russia and South-Africa each have their own problems. But India still has strong trump cards on the economic front in its hands, and the economy of this country continues to grow at a good pace. That means that prosperity could increase rapidly in the coming years. When the people earn more money, consumption will also rise sharply. And this will also lead to investments by Indian and foreign companies rising. For car companies too, there are opportunities, because the mobility of workers will certainly increase. | 11/03/2016 | Jos Sterk