E Roubini On India Growth And Status Of Asia Fusion

India and China account for much of the economic growth in the world. But Nouriel Roubini warns that 6 percent growth is too low for India. He would like to see growth in the 7 to 8 percent range.

As it is, while China has an overabundance of infrastructure, Roubini believes that India needs much more infrastructure. On the positive side, this means India could grow faster than China over the next few years.

Emerging markets are going to drive world growth, and while China exports, the economist believes that the nations of India, Indonesia, Brazil and Turkey can grow faster due to preexisting homegrown domestic demand.

China has had difficulty transitioning to a consumer based economy, but less so for the other EM nations.

India faces infrastructure challenges, with low marks for roads, electricity and total infrastructures compared to many nations in the world. India also has the disadvantage of having to pay for most of its petroleum needs. The nation faces a difficult situation where it really needs to raise rates and lower rates at the same time. It needs to raise rates to fight inflation and lower rates to spur growth. Roubini pointed out the dilemma.

India has major problems on top of infrastructure. It has a low per capita standard of living, but with a billion plus people, the economy is large as a whole. Its credit rating is low, BBB-, yet better than the previous BB+ seen in the past. Fitch rates the nation as stable. Reporting on Fitch, the India Times said:

 

The agency sees a growth of 6.8 percent in the fiscal year ending March 2020 (FY20) and 7.1 percent in FY21, supported by accommodative monetary policy, an easing of bank regulations, and government spending. 

Apparently there is some dispute about just how fast India is growing and will grow, as the Asian Development Bank puts 2019-2020 growth at 7.2 percent. That bank mentioned improvements in government policy to spur investment should lead to robust growth:

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Disclosure: I have no financial interest in any companies or industries mentioned. I am not an investment counselor nor am I an attorney so my views are not to be considered investment ...

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