India, China save world`s economy?
Jan 27: With fears mounting of a global economic slowdown,
some analysts predict developing giants China and India, with
their booming growth, will help lessen the impact.
market turmoil this week triggered by fears of a US recession
in the wake of a massive mortgage crisis has ignited debate
over whether Asia's two rising economic stars are strong enough
to power the world economy.
directly challenges the 20th-century economic adage that when
the US economy sneezes the rest of the world catches a cold.
is occurring is the rise of other economies to balance out
those of the US -- and that has to be a good thing,"
said Chris Devonshire, a business consultant specialising
on china and India trade.
"The US has problems but these will be offset against
markets elsewhere. The new world order is working," he
saw scorching expansion of 11.4 per cent last year, closely
followed by India's 9.4 per cent, and the prospects for both
economies remain strong.
expect China and India to support regional growth in the event
of a significant slowdown in the US," said ING Barings
Asia economist Prakash Sakpal.
a shakeup is significant because jobs and livelihoods are
at stake, but also because, as financier George Soros wrote
in the financial times, it could signal a major shift in economic
current financial crisis is less likely to cause a global
recession than a radical realignment of the global economy,
with a relative decline of the US and the rise of China and
other countries in the developing world."
Zhang Ming, an economist at the Chinese academy of social
sciences, dismisses the notion that the Chinese and Indian
economies are independent of US consumption.
you want to look at who is going to be the motor of global
growth then you have to look at who provides the biggest market
for the world's production of goods," said Zhang. "In
the short run America is still strongest. China still has
a long way to go."
whose 3.4-trillion-dollar economy is about one-third derived
from exports, could easily face economic difficulties if it
were to lose the 2.5 growth percentage points garnered from
trade, said Stephen Green, a standard chartered economist.
Indian exports represent only about 17 per cent of its 1.1
trillion dollar gross domestic product, allowing it greater
resiliency in the face of a US recession, analysts said.
economy is geared to domestic demand. We are insulated so
that even if there is a US recession it will not have such
a direct impact on the Indian economy," said federation
of chambers of commerce and industry economic adviser Anjun
given that India's share of world trade in 2006 stood at 1.5
per cent, it is not in a position to boost the world economy,
Roy said, citing official statistics.
roach, a leading economist as head of investment bank Morgan
Stanley in Asia, said this week that the idea China and India
could power the world economy on their own could "turn
out to be a fantasy."
also argued in a recent note that when the US consumer is
in trouble this has great consequences for the world economy.
He calculated that American consumer spent a combined USD
9.5 trillion last year while Chinese only laid out one trillion
dollars and Indians USD 650 billion.