The visit of Chinese President Xi Jinping to India this week, so early in the term of India’s new Prime Minister, Narendra Modi, underlines the growing strategic weight of the relationship between the two countries. Modi’s prime ministership, with its ambition to re-invigorate India’s stalled economic reform and growth, more than any other single factor, promises to accelerate its potential growth radically.
The BRICS (Brazil, Russia, India, China and South Africa) group of emerging economies have agreed to contribute $100 billion to a currency reserve pool that will guard against future financial shocks, such as the recent mass exodus of cash from emerging markets caused by the U.S. Federal Reserve’s most recent quantitative easing program.
The worst is likely over for Europe after a prolonged five-year economic contraction and analysts say emerging markets in Central and Eastern Europe could be on the verge of a new growth curve.
London-based analysts at Capital Economics on Friday told the AFP that “evidence of a possible turnaround is strongest in emerging Europe, and weakest in emerging Asia.”
Since the 2008 financial crisis, both China and India have taken steps to become more financially open. But while the Indian economy appears to be ahead at present, policy continues to segment onshore and offshore markets in both economies and policymakers face challenges in further financial integration.
With many of the world’s major emerging economies now moving towards a stagflation-lite situation, where inflation sticky at high levels but with growth decelerating or stagnant, can leaders find the correct policy response?
Here is an update on several emerging markets by my colleague Ilan Solot:
The World Bank on Tuesday said that it was ready to support the new development bank being established by Brazil, Russia, India, China and South Africa (BRICS), in a statement just hours after the groups of emerging nations reached a deal to challenge nearly seven decades of World Bank dominance.
Chinese and Indian consumers are expected to spend nearly $64 trillion between 2010 and 2020, said a new study by global research and advisory firm Boston Consulting Group (BCG) on Tuesday, urging Western companies to in order to “capitalise on this opportunity.”
Indian and Chinese commerce ministers meet in New Delhi today for the ninth instalment of the India-China Joint Economic Group. However, India is expected to raise concerns that China is benefitting more out of their trading relationship that reached $74 billion last year.
While the two countries remain upbeat on their $100 billion bilateral trade target for 2015, this year’s JEG is taking place against a backdrop of seven consecutive months of declining trade volumes.
Two major BRIC countries, Brazil and China, have announced that they will swap as much as $30 billion in their respective currencies, a move that symbolises deeper economic cooperation and closer ties between the two emerging markets.
The currency swap, worth 60 billion reais or 190 billion yuan, was at the centre of a wide-ranging trade agreements aimed at boosting investment and trade flows for the coming decade.
The announcement was made yesterday by the Brazilian finance minister Guido Mantega on the sidelines of the UN Rio+20 Summit.
Foreign investors are losing patience with India’s policy paralysis, corruption scandals and slow growth. According to a report by Reuters, India is experiencing an outflow of money as investors seek higher returns in more promising emerging markets such as Indonesia.
In the words of Jim O’Neill, chairman of Goldman Sachs Asset Management, India has turned out to be the “biggest disappointment” of the BRIC nations.
