As the pro-business Narendra Modi comes to power in New Delhi with a powerful popular mandate, investors are hoping for an economic turnaround and some hard-hitting policy reforms.
So there was plenty of interest when the Reserve Bank of India (RBI), the central bank, released its half-yearly financial stability report late on Thursday. Its conclusions are not all rosy for Asia’s third largest economy. Read more
By Deepak Lal
In the midst of an interminable election, all the opinion polls are predicting an absolute majority for the Bhartiya Janata Party (BJP) led National Democratic Alliance. If the polls are right – which they were not in 2004 and 2009 – Narendra Modi, the BJP’s prime ministerial candidate, will be at the helm of the world’s largest democracy in about two weeks.
So, it is important to assess Modi’s character and what he stands for. Given the starkness of the divergent images being projected by those for and against Modi, the question arises: will he be a Margaret Thatcher who restores economic growth and India’s standing in the world, or an autocrat who kicks away the democratic ladder which has led him to power, like Hitler, promoting an ideological pogrom against a religious minority? Read more
By Neelanjan Sircar and Milan Vaishnav
Come election time, a standard trope goes that India is engaged in a relentless tug-of-war between its rural and urban populations. On the one hand sit urban metropolises like Mumbai and Bangalore, whose cosmopolitan citizens rail against corrupt politicians, fetishise growth and care little for parochial concerns, like caste. On the other hand sits India’s vast rural hinterlands, where caste dictates social relations and corruption takes a backseat to basic sustenance. Yet if this divide did once provide an accurate description of the country, there is good reason to doubt it as India heads to the polls in 2014. Read more
So rarely does China’s official GDP growth target bear more than a passing resemblance to subsequent reality (see chart), that it might be regarded as a less than useful indicator.
This year, however, much is riding on which number – if any –Beijing announces as its GDP target for 2014 at the annual National People’s Congress (NPC), which convenes on Wednesday. There are several potential permutations, each of which may indicate very different policy intentions. Read more
If recent examples of revolution and politcal transition are anything to go by, Ukraine is in for a nasty shock in terms of economic growth.
Following a year of upheaval, GDP growth rates can weaken by between 4 to 8 percentage points the following year, according to a Capital Economics note on Thursday. Read more
These days, Jim O’Neill doesn’t bother much with “Brics” – the moniker he invented. The former Goldman strategist is more into “growth markets” instead. So – is it time for him to look more closely at the FTSE100, rather than the Bovespa?
Based on the new Bank of England projections, the UK economy is set to grow at a 3.4 per cent clip this year. Not too shabby. Less shabby still when compared with the supposedly “high growth rates” in certain parts of the emerging world. Read more
The boys and girls of central and eastern Europe have been pretty good this year and Santa looks like he has some goodies in his sack for the region over the upcoming year.
A look at a raft of end-of-year analyses of the CEE region shows that the gloom that was afflicting the region last year has largely lifted. Read more
For much of their history, the economies of Latin America have been isolated not only from the rest of the world but also form each other. Over the past quarter century, this has changed and the region now has the opportunity to embark on a virtual circle of development. But to realise this potential, governments must still deal with daunting challenges, writes Juan Carlos Echeverry of the Inter-American Development Bank. Read more
Are fixed exchange rates bad for growth? Much of the economic literature suggests no causal relation between a country’s exchange rate regime and economic growth. But the IMF has produced a paper suggesting that sub-Saharan Africa may be different.
Manuk Ghazanchyan and Janet Stotsky, the authors, perform a random effects model and find that non-oil exporting nations that claimed to have a flexible exchange rate had significantly higher GDP per capita growth from 1999 to 2011. Read more
Emerging markets are so over. So says Lawrence Summers – you can read beyondbrics’ take on his theory here – and so says Anders Aslund, in a paper published by the Peterson Institute, titled Why Growth in Emerging Economies Is Likely to Fall.
Another body blow to the catch-up theorists. What’s the argument this time? Read more
Do you bet on two baseball players who are on a lucky streak? The law of averages says no: in the long run, both players will revert to their mean scores.
By the same rule of thumb, Larry Summers says that economists should not expect India and China to grow significantly above their long-term average of 2 per cent per capita. (Anders Aslund has a similar argument – which beyondbrics examines here.) Read more
It turns out the OECD’s May forecasts (made days after hints of tapering) were off… by quite a lot.
On Tuesday, the body knocked 2.3 percentage points off its forecasts for India’s GDP growth in 2013, for example, and 1.7 points off its growth in 2014. Read more
An interesting take on the 1997 Asia crisis from Carmen Reinhart, known for her influential (before it was corrected) paper on the relation between growth and debt, and Takeshi Tashiro.
A new research paper from the two economists this week argues that Asia still hasn’t recovered from 1997 in one key regard: investment is still pitifully low, from India to South Korea. Read more
Maybe it’s time to start preparing for a return wave of CEE migrants from western Europe, as Thursday’s flash GDP third quarter numbers show that most of the region’s economies are experiencing a sharp recovery – in contrast to stagnation in the eurozone. Read more
A mixed picture for the prospects of an economic recovery emerging Europe, according to Monday’s forecast from the European Bank of Reconstruction and Development.
The EBRD found that the more advanced countries of central Europe will probably do a bit better than expected next year, while the rest of the post-communist region is sputtering. Read more