Ietwat in de schaduw van China is de economische opkomst van India niettemin stormachtig geweest de afgelopen decennia. Maar ook India krijgt nu problemen.

India’s growth has slowed down, the latest GDP numbers are out and in this quarter it has come down to just 5 per cent – much lower than what was expected, and in fact, the lowest in six years. Just a couple of hours before the data was released, the finance minister announced the merger of PSU banks, cutting the number of government banks in India from 27 to 12, arguing that this was needed to strengthen credit. The government hopes this will improve lending to businesses and ordinary folk right down to the branch levels. On The Big Fight, we discuss whether this move by the government will be enough or is the economy in a deeper crisis than we think?

Duur 49:25

Publicatie 30 augustus

Een begeleidend artikel van Daniel Lacalle vindt u hieronder. Inleidende alinea’s:

India’s economy had an annual growth of 5.0 percent in the April-June quarter, the slowest in more than six years dragged down by weak consumer demand and private investments.

A Reuters poll of economists had forecast annual growth of 5.7 percent for April-June, compared with a 5.8 percent rise the previous quarter. For April-June 2018, India reported 8 percent growth.

Last year I commented about the risks for India here.

Governments always consider that economic problems come from lack of demand, and they assign themselves the task of “correcting” that wrong assumption by massively increasing deficits and using monetary policy well beyond any logical measure.

India’s rising populist policies are part of the nation’s current problems.

Recent data is quite concerning.

Industrial production, manufacturing PMIs  and growth estimates are coming down (according to Focus Economics).

According to Kotak Economic Research, India’s current account deficit is forecast to be the highest in six years. The overall balance of payments is moving into larger deficits than expected, as capital inflows weaken and are unable to current account deficit.

Verder lezen kan hier.

Over de politieke problemen van India met Pakistan en China kunt u hier op VoL meer lezen.