Posted on 02/08/2009 12:20:41 AM PST by MimirsWell
Call it the brighter side of the current downturn. India may pip export-dependent China in the last quarter of FY09 and emerge as the fastest growing nation among all large economies. As China’s GDP growth rate dropped to 6.8% during October to December quarter and is expected to go down further, the Indian government has become hyper-active to achieve at least a 6.5% growth in Q4 to register a win over China.
If India achieves a better growth rate than China even for one quarter, the message will go across to the world and help India in wooing foreign capital, waiting to chase growth stories. Already, government officials in India have been highlighting reports of a few investment analysts who doubted China’s official GDP numbers and claimed that it could just be in the positive territory in the last quarter.
A secretary in the government of India confirmed to SundayET that India has a brighter chance of overtaking China in the last quarter of FY09, or Q1 in case of China which follows the calendar year. “China is heavily dependent on exports and the way things are unfolding China’s GDP for January-March quarter would be quite low. We have so far achieved 7.9% and 7.6% growth in the first two quarters, according to the provisional numbers. Though our Q3 number, to be announced by month end, is expected to be less than the comparable number in China (6.8% in Oct-Dec, 08), the softening of interest rates will stimulate demand and ensure a faster growth rate than China in Q4,” he said.
Though the Chinese economy grew at 9% during 2008, down from the revised 13% growth rate in 2007, the last quarter number (6.8%) has made the Indian authorities hopeful that India might be able to pip China in GDP growth. As China’s export constitutes 37% of its economy against 13% in the case of India, the recession in the developed world will make China suffer the most.
Prime Minister’s economic advisory council (EAC) member Satish C Jha said he won’t be surprised if India grew faster than China. “The situation in China is worse than us. Exports are drastically coming down and China is hit hard. Our economy is driven more by domestic demand and our rural economy is much more resilient than that of China. If our stimulus packages are implemented properly, I won’t be surprised if India pips China in GDP growth,” Mr Jha said.
RACE HOTS UP 6.8% CHINA’S GDP GROWTH RATE IN OCT-DEC QUARTER 37% CONTRIBUTION OF EXPORTS TO CHINA’S ECONOMY 7.6% INDIA’S GDP GROWTH RATE IN JULY-SEPT QUARTER 13% CONTRIBUTION OF EXPORTS TO INDIA’S ECONOMY
In 2009, the Chinese economy will grow due to government spending and not consumer demand growth. The Chinese government is remarkably protectionist and its procurement principles are extraordinarily opaque - giving undue advantage to Chinese firms. So its unlikely that American, European and Japanese multinationals will benefit from its growth in the coming years. Might as well pack up and leave while you can.
I wonder how accurate the numbers for comparison are?
Interestingly, India is also poised to take over China’s place as most populous nation, if it hasn’t already.
I’d rather have them [India] be the powerhouse of asia.
India is 200 Million people behind. I expect the overtaking to happen before 2020.
The comparison figures are completely flawed. Notice the quarters being compared - India’s figures have been depicted in a quarter that was far better globally than China’s figures. Like I said, the article’s thesis is unlikely to become reality.
Having said this, I still standby what I say regarding the benefit of China’s future growth for the rest of the world. China has always been protectionist while wailing and whining about similar treatment it receives elsewhere. Government spending-spurred economic growth in China will only benefit Chinese companies.
I don't know. Tata was run out of Singur. NIMBY?
yitbos
The ChiComs just take land if they want to build some place.
Land in India is a problem for business?
yitbos
Very good point raised. Let me respond to that:
1) Tata is an Indian company. With regards to the people’s reaction to less than transparent deals, there is no differentiation between Indian or non-Indian companies. If the Bhopal gas tragedy was caused by an Indian company instead of an American one, the reaction would have been the same, and the company would have been brought to its knees. Union Carbide on the other hand, got away quite lightly.
2) Singur is in West Bengal. A state that has continuously voted Communists to power for a good part of the last 3-4 decades. The Communists of the state tried to copy their Chinese comrades in the style with which they took away land from the owners and tried to hand it over to the Tatas - without sufficient compensation. The people protested and the Tatas were thrown out. The Tatas then went to Gujarat - which is by far the most capitalist and economically developed states in India - here the land was allotted in a clean manner and the Tatas are happy - shows the benefits of a business-friendly, yet clean and transparent system of governance. I wont be surprised if the communists get finally booted out of West Bengal this time around.
Buy Indian goods.
Cheers!
They better not or China may invade...they are a communist country after all...can’t trust them.
What would be the path for any potential invasion?
I sure that all the US dollars being shippied bacck to India by H1-B visa holders is helping that growth.
You’ll like the data in this link. India is indeed the biggest recipient of expatriate remittances in the world since 2008. The consequent strengthening of the USD would have made it more so in 2008-2009. I can’t find the latest data.
http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1110315015165/MD_Brief8.pdf
Who knows? Who would have ever foreseen the Japanese attacking Pearl Harbor.
Some guys always celebrate before, instead of after, they win the lottery.
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