Further business and legal reforms are needed to maintain progress but India is on a path to top China in the global economic growth race, the Financial Times reports.
Indian Prime Minister Narendra Modi has embraced business and legal change to fuel robust economic growth, explained Martin Wolf, the FT’s Chief Economics Commentator.
Wolf explains that Modi plans to reverse the nation’s investment slowdown by “creating a clear, transparent, and stable tax and regulatory environment” and cutting the cost of doing business with India, one of the world’s fastest growing major economies
The slowdown of the Indian economy in 2016 and early 2017 “has already been reversed: it is now full(ish) speed ahead. Yet, on the basis of what has happened so far, a reasonable bet could be that growth will stabilize somewhere between 7 and 8 percent a year, provided, significantly, the global environment remains supportive. In all, India should regain the title of ‘fastest-growing large economy in the world’ from China, this year,” Wolf predicted.
“Mr. Modi indicated his determination to implement vital structural reforms in last month’s speech to the annual meeting of the World Economic Forum in Davos. His agenda is impressive and wide-ranging,” Wolf said.
For his part, Modi mounted a defense of globalization at the World Economic Forum late last month, urging joint action on climate change and economic cooperation, in a speech some delegates took as a swipe at U.S. President Donald Trump’s America First agenda.
Modi, making the forum’s first speech by an Indian head of state in more than two decades, did not mention Trump by name but he criticized the rise of protectionism in remarks delivered three days before the U.S. President will address the summit.
“Instead of globalization, the power of protectionism is putting its head up,” Modi said, speaking in Hindi and causing an initial flurry in the audience of business and political leaders as people reached for their translation headsets.
“Their wish is not only to save themselves from globalization, but to change the natural flow of globalization.”
Modi is leading a big government and business delegation to the summit in the Swiss ski resort of Davos, aiming to showcase India as a fast-growing economic power and a potential driver of global growth.
Modi laid out three big challenges facing the world: climate change, terrorism and growing protectionism.
“The result of this is that we are seeing new types of tariff and non-tariff-based barriers being imposed. Bilateral and multilateral trade negotiations appear to have come to a halt,” he said.
He said the world must come together to solve these issues and India could show it the way, referring frequently to ancient Indian thought and scriptures that call for harmony between humans and nature and refer to the world as family.
Meanwhile, China's economy grew faster than expected in the fourth quarter of 2017, as an export recovery helped the country post its first annual acceleration in growth in seven years, defying concerns that intensifying curbs on industry and credit would hurt expansion, Reuters explained.
The official growth figures released on Thursday are welcome news for Beijing policymakers who are looking to cut debt and pollution in older industries without stunting growth in the world's second-largest economy.
China's gross domestic product grew 6.8 percent in the October to December period from a year earlier. That was better than the 6.7 percent growth forecast by analysts in a Reuters poll and unchanged from the previous quarter.
The headline numbers and signs of property market resilience support economist views that fundamentals will remain intact in 2018, although some see headwinds from tighter regulations, U.S. trade protectionism and a softer consumer sector.
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