Posted on 05/07/2005 11:48:31 PM PDT by CarrotAndStick
LONDON- With economists forecasting India’s economy to grow by seven percent during the fiscal year 2004/05, the country is seen as catching up with China to become a major consumer of raw materials and influence over commodities markets.
“Will India be the next China for commodities?” Barclays Capital analyst Kamal Naqvi wrote recently in a research note to clients.
“This is one of the questions that we are being asked most often at present. The answer is probably no, or at least, not yet. However, considerable potential does exist.”
With annual gross domestic product growth of 9.0 percent since 2003 and some 1.3 billion inhabitants, China has played a key role in raising the price of commodities traded on world markets.
Oil, metals, cotton, rubber, sugar, grains, wool—all are sought by China in large quantities and the slightest change in its demand for such products can have a major influence on price direction.
India, which also boasts a population of more than one billion people, is yet to wield the same influence over commodities as its Asian neighbour, but for many analysts it is only a matter of time before it catches up.
“It is clear that in one or two decades, the trading landscape will change in tandem with these two countries’ evolution,” Refco analyst Philippe Pesque said.
“They are the world’s two biggest demographic powers and which have the most unbelievable rates of growth. In a generation, if there are no hitches, their impact (on commodities) will be very spectacular,” Pesque added.
Investec analyst Bruce Evers said there was “huge scope” for the gap between India and China to narrow.
“The Indians are incredibly entrepreneurial,” he said.
“There is a rapidly growing middle class who are making a lot of money through setting up their own businesses, and this access to new money is enabling them” to consume.
India has contributed largely to soaring Asian demand for hard commodities, such as oil and metals, during the past two years.
It is by far the world’s biggest consumer of gold, representing about a fifth of global demand. The precious metal is bought in bulk in the form of jewellery that is offered as gifts on the occasion of marriages and the country’s various festivals.
“Gold is a big part of Indian life and as people get richer they’ll buy more gold jewellery,” Evers said. China is the world’s biggest consumer of platinum jewellery.
India accounts for only two percent of world copper demand compared with 22 percent by China, which is ahead also regarding crude oil. China accounts for eight percent of crude compared with three percent by India.
In 2004, India began importing sugar for the first time and the country imports a lot of cotton as well as some wheat and maize. However, it has been lukewarm about cocoa and coffee, prefering the taste of tea.
Well, I sure hope they won't be "the new China". I hope that they will become a new capitalistic, economically successful trading partner and reliable political and military ally to the USA; not a country that wants to destroy America in particular and western civilization in general as is China's ultimate goal..
Amen. I hope India will be better than China!!!!
Gold is wasted money. Better to invest it, or pool it to make a startup. Gold causes usable money to be removed off circulation, and that is not a good thing.
Exactly. Jewellery serves very little practical purpose. The money could have been better spent.
And India imports nearly all of its gold. That means money is wastefully expended.
On the contrary, oil too is imported, but this oil is used for vital purposes, which pay back in much greater value, like factories that use the power from burning oil, and the such, making products that fetch far greater value, monetarily. Plainly put, machines before ornaments.
Actually gold is a nice hedge against risks in the stock or bond markets. Right now - with the prevailing risk to the US economy it is considered the prefered investment. :-)
real "diversity" in action.
the competition between india and china will be interesting to watch.
Actually art rules all of us! Look at it this way, we engineers make the latest silicon chips, the most complicated software, the greatest cameras, the hottest display technologies, the best amplifiers and speakers, the most exotic of chemicals, and launch dozens of satellites into space every year, and all for entertinment, which itself is art!
India has far more of the prerequisites for successful development into an economic force than China--a history of democracy and relatively free markets, established rule of law, respect for property rights and thus a functioning system of credit.
Behind the veneer of state-driven urban centers, China remains culturally primitive, a land of bandits and swindlers.
A bump for India....they have some centers of great Technical training for Scientists and Engineers....an area that the USA is getting very weak in!
I liked it better when China and India were squalid little wretched huddles of humanity.
"I liked it better when China and India were squalid little wretched huddles of humanity."
Unfortunately, that is real reason why so many on this message board resents a progressing China, regardless of what China's political system is.
Hello? Did you bother to read my post carefully? I was suggesting that money was better spent by investing(privately) it rather than by buying irrational amounts of gold. Look at this, India, one of the poorer countries of the world, is the largest, most obsessive buyers of gold, that too for non-technical or non-constructive uses. Are you telling me that you don't find anything wrong with this scenario?
Buying gold is like burying capital in a hole in the ground. It is like preventing money from circulating. Basic economics dictates that that this is foolish.
Sure, Indians must spend their money as they choose. So is it with thw Americans. Some buy too many clothes, some buy too many books, some buy too much booze, some buy drugs and some buy too much gold. Now, are you telling me that all of the above buying habits should be found favourable by me?
Please don't blindly label others here. Although we agree well with a lot of things, your stamp-marking behaviour is resented.
Oops, I posted the above reply before reading your second sentence.
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