Global Economic Growth Slows India's Most Vulnerable

Beijing time on November 24th afternoon, along with the India stock market fell to a two-year low Thursday, including a well-known investment expert Rodgers (Jim Rogers), many analysts said that India is relatively lucky to avoid the 2008 financial crisis, but this time it is particularly vulnerable. India's Mumbai stock index has fallen 1/4 since the beginning of this year, while the rupee depreciated 17% against the US dollar. The exchange rate touched a historic low earlier this week.

Rodgers, who sang many Chinese, said he was not optimistic about the India stock market at the Asia Business Leaders Awards Conference in Singapore.

Rodgers said that considering the debt to GDP ratio of more than 90%, it is difficult for India to achieve economic growth and the debt situation may be even more severe. The chairman of the India Planning Commission recently revealed to the media that the budget deficit in the current fiscal year (March 2012) will account for 5.5% of the GDP, and that the economic growth rate may be only 7-7.5%, far lower than the initial 9-9.5% expected by the government.

India is also facing a worsening current-account deficit. The current account deficit in the second quarter expanded to US $14 billion 100 million in the previous quarter of US $5 billion 400 million. The third quarter figures have not yet been released, but are expected to continue to deteriorate in the light of the impact of the European debt crisis.

CEO, the largest bank in Southeast Asia and DBS Bank of Singapore, believes that Asia's economic growth will fall by 1-2 percentage points in two years due to weak exports.

Gao bode said that although exports accounted for 30% of China's GDP, far higher than the proportion of 19% in India, but in the short term, China's response to global economic slowdown is more than India: "China has the strength to slow down economic growth." We can invest trillions in stimulating the economy, and India, with a deficit of 10%, including the deficit of the central government and local governments, is obviously unable to cope.

However, he believes that India is better than China in the medium and long term (10 years) because the former's capital allocation and financial institutions are more efficient. In addition, India's domestic consumption accounts for 2/3 of GDP, while China has only 1/3. In the face of the difficult global economy, India enjoys a greater buffer than China.