India: The sleeping giant

Shifting to another emerging economic powerhouse in the region, India has captured much media attention of late.

With its large, well-educated, English speaking workforce, India has arrived on the global scene with the potential to become a key player in the years ahead. While economists bandy compelling long-term forecasts, not many are predicting India will eclipse China any time soon.

“Clearly, for a half a century, India has been a country of enormous potential,” Goldstein says. “If there is a sleeping giant in Asia, it is India.”

But in regard to India he also references Charles de Gaulle’s supposed comment on Brazil: “It is a country of enormous potential and it always will be.”

Nonetheless, strong domestic demand and solid external demand, especially for business process outsourcing have been supporting solid growth numbers in India, notes Dr. Ruth Stroppiana, Moody’s Economy.com India economist.

She calls for GDP growth just below 7 percent in 2006, which follows growth of 8.3 percent in 2003, 8.5 percent in 2004, and 8.5 percent in 2005.

Buskas says India’s growth patterns have been different from China’s. India has some structural issues going for it, she notes, pointing to its workforce and its flexible government.

“It doesn’t have its hands tied by a former Communist regime,” she says. “Also, the run-up in foreign direct investment hasn’t been as sharp in India as China.”

Stroppiana adds, “In recent years, the China factor has had a large impact on global trade and investment patterns. While India’s ascendancy is also being felt, it will be quite some time before India will have a major impact on the global trade or investment picture.”