Will Chinese Economy Surpasses USA?

India, China, and Global Economy

First Published: ADawnJournal.com February 3, 2010
 

While the global recession has just come to an end, and some nations are starting to dig their way out of financial distress, the economies of India and China continued to grow while most others were bogged down.

Some economists even point out that India and China are leading the way and doing more than their share when it comes to boosting the global recovery. Many of them also predict that China will eventually take over from the United States as the world’s economic superpower sometime during the next 10 years.

That doesn’t really come as much of a surprise to the man on the street though, but what may be a shocker is that India may also soon overtake the mighty U.S.  However, while the two up and comers are become big players in the global economic game, they are achieving it in with a different set of skills and under dissimilar governments.

At present, most economists will agree that when it comes to the top tier of global economic standing, the U.S. leads Japan and China. According to the CIA World Fact book, the GDP (gross domestic product) in 2008 showed the U.S. at US $14 trillion, Japan at $5 trillion and  China $4.4 at trillion. However, India has cracked the top 2$1.20 and sat at number 12 on the 2008 list at trillion.

While China may be growing pretty rapidly, it’s still got a long journey ahead before it catches up to America. And from these figures, that would appear it might take decades. However, the key point to remember is that while the economies of China and India are still growing, the rest of the nations’ GDP around the world has certainly stalled or at least slowed down for the time being due to the recession.

When a country’s economy is considered to be strong, its citizens often spend their money on big-ticket items such as homes and automobiles. However, when a recession hits and the economy is weakened, people hang on to their money and these types of purchases are postponed, especially when jobs are being lost. This can clearly be seen over the past couple of years in the U.S.

But the citizens of China are spending their hard-earned money at a high rate and it’s predicted that by next year China will surpass America when it comes to car sales. The recent recall of millions of Toyota automobiles and the temporary halt of production in North America will also hurt American sales.

It is estimated that China’s growth rate averages between seven and eight per cent, while the U.S. predicted growth is just over one percent. If these numbers are accurate, sooner or later China will pass the leader in our lifetime.

It also looks like India will soon become a major player as its growth rate looks pretty high for the next few years. While the nations’ GDP is well below the U.S. and China at the moment, it has one of the largest populations in the world.  And considering the comparatively low wages and areas of poverty, India’s GDP is quite impressive.

However, India’s economy is mainly based on services instead of goods and its economy has the potential for great growth because of its population and excellent knowledge base.  In fact, many economists predict that India will be among the top economies of the world by the year 2020.

Will IMF Be The World’s Central Bank?

IMF & Global Economy

First Published Published Date : October 7, 2010 ADawnJournal.com

Slow Global Economic Recovery – The International Monetary Fund (IMF) says that the world’s economic recovery is underway but seems to be unbalanced and sluggish. Emerging and developing countries are recovering stronger and faster than developed countries.

Global Financial safety Net – To manage future financial crisis better, IMF plans to create a framework of global financial safety nets. The safety net would be a pool of money to provide some sort of credit line to those countries in need to cope with financial volatility and crisis. This is like – IMF will be working as a global central bank. However, Germany opposes IMF’s role as a global central bank. A Deutsche Bundesbank official said that it would create moral hazard for those who agree to provide unlimited, unconditional liquidity in financial crisis. During the Asian financial crisis, IMF did not approve an idea of creating an Asian Monetary Fund by Asian countries.

Canadian Building Permits Drop – Stats Canada reports that building permits in August dropped 9.2 per cent from July. The big chunk of drop came from non-residential sector. However, the residential sector increased by 2 per cent after declining for 4 months.

What’s Happening – A Test Project

Whenever I come across interesting news, events, stories, etc., I will be sharing them with my readers in mini blog posts.  This is a test project. Based on readers’ responses, I will decide to continue or discontinue later on. No links will be provided; if you would like to find out more on these events, please search on Google

Will India Overtake the United States in Economic Terms?

India – An Emerging Superpower

First Published: July 5, 2009 ADawnJournal.com

For as long as most of us can remember, the world’s largest economies have been the same. For economic muscle and influence, it was to the United States, the more established nations in the EU and to Japan that most attention was turned. But in the early part of the 21st Century, a lot has changed. New alliances form, and new industries flourish over time, but what few people saw coming until very recently was the arrival of a new economic force made up of some very diverse nations – the BRIC. Brazil, Russia, India and China – four nations with vast landmasses and huge populations which had nonetheless, for one reason or another, failed to flourish as global economies. As we come to the close of the century’s first decade, each is – for its own reasons – coming to bear more power in the global market.

There are those who would have sworn blind that India was the last country that would emerge as a global economic big hitter. The overwhelming impression that many first have when India comes to mind is the poverty that has dogged it for many years – and there is still a significant proportion of India’s population that lives below the “international poverty line”. There are still street children in India’s cities – but the poverty in this nation may yet be attenuated to some extent if the government of Manmohan Singh and his successors handles the continuing financial growth of this nation as they would hope to. One of the things that has previously held India back – its massive population, which some would dub overpopulation – is set to be at least partially beneficial, giving a very large workforce to a country which encourages foreign investment.

India’s huge and diverse landmass is also beneficial in economic terms, as it allows the country to spread its economy over a number of industries – agriculture is a major one, and the service industry even more so. India’s industrial sector, which includes major textile, chemical and steel industries, means that whether the world’s money is in construction, fashion or medicine, there will be a demand for what India is making and what it is exporting. Within the next decade the GDP per capita is likely to skyrocket – although how evenly this is distributed will be the focus of much attention.

Whether or not India finds a way of squaring the circle – its economic growth is attributed to its move towards a market-based economy, and may rule out a program of wealth distribution – it is still set to be one of the motors which drives global economic growth in the years to come. There is every chance that, once the final economic figures for the year are collated and calculated, India will have had growth of almost or more than 7% – making it a rare nation in a world where growth is still absent from most economies in the wake of the worst global recession for more than sixty years. Most forecasts suggest that in the middle of this century, India will overtake the United States in economic terms. Like we say, not what we might have expected a few years ago.

Will India’s Stalled Economy Pick Up?

World Bank Cuts India’s Growth Forecast

First Published: ADawnJournal.com November 2, 2013

The days of the 8 percent GDP growth are distant memories and it seems like India’s economy has nowhere below to go, except up.

According to the global credit rating agency Moody’s, India should see a growth of 6.5 percent by the second half of 2015. On the same note, Moody’s expects fixed investment to grow 3.5 percent in 2014 as well.

However, the World Bank predicts a different picture. In a report released in recently, the World Bank cuts India’s GDP growth from 6.1 percent to 4.7 percent for 2013/2014 fiscal year and expects economy to go up to 6.2 percent in 2014/2015 fiscal year.

The International Monetary Fund (IMF) even predicts a more conservative growth 3.8 percent for 2013 and 5.1 percent for 2014.

India’s central bank chief ,Raghuram Rajan, expects the economy to pick by the year end due to restarting $115 billion dollars stalled resource projects and better than expected agricultural production. However, whether the interest rate hike is eminent is still uncertain.

India’s economy grew at around 8 percent between 2002 and 2013. In 2010-2011 it reached its peak at 9.3 percent, but reached a ten-year low, 5 percent, in 2012-2013.

World Economy, Recession, and Investment Opportunities

Reading the World Economy

First Published: ADawnJournal.com May 31, 2009

While there is a lot of talk about the current economic strife affecting a large part of the globe, it is natural that there will be different levels of concern in different nations. This is a global recession, and it is affecting people on each continent. But when one says “global”, does that mean that everyone is in the same boat? Well, no, of course not. There are different levels of indebtedness and different prospects for recovery in just about every independent economy. How countries have prepared for a time just like this will affect how able they are to deal with it. Some countries are not, for their purposes, in recession at all.

Reading the finance pages of daily newspapers, it can be tempting to try and keep score, as we watch one economy after another slip through the trapdoor. When one country goes it is natural to look at its near neighbours and its historical allies and trading partners in order to see if they will follow – or how their own plans will be affected. It is easy to see, in retrospect, how the major world economies slipped into recession, as credit was given in too cavalier a manner to people who were ill equipped to pay it back. There are some countries who have fallen in a secondary wave because their industries have been hit by a reduction in orders from recession-bitten nations.

Then there are other countries who have managed to remain as yet untouched by the grim hand of recession. It is interesting to look at these countries and see what they have in common – usually it is the fact that they have strong infrastructures, an industry that the rest of the world relies on even in times of financial privation, or have been more or less isolationist from a trade point of view. Some combination of the above is a recipe for being largely recession-proof – but at the cost of being less likely to profit from a global boom.

Reading the recession is worthwhile, whatever your reasons for doing it. If you are a potential investor, it helps to know what countries are ripe for investment opportunities and which are to be avoided at all costs. If you are concerned about your own position within an industry, it can help to see how that industry is faring worldwide. It is also true to say that the first people to see (and maybe profit from) th e end of the global recession will be those who follow the financial news from all over the world.

Although this world is split up into hundreds of countries, and those self-same countries are often devolved into administrative regions, there are generally global consequences to local issues. You may not know today how a drop in the price of a certain commodity will affect your own life, but by watching the stories as they play themselves out you can give yourself a firm grasp of the issues that may not matter right now, but will begin to pretty soon.