Jim O’Neill: India has the most prospects among BRIC countries: Jim O’Neill
How do you see China as a economy develop and open in 2023? Some call it a black box, some call it Pandora’s Box and everyone is guessing?
I agree with that. But since most of the countries have experienced eventual variants of omicron COVID, it seems quite mild and it is unlikely that China is currently accelerating vaccination rates significantly and they have passed.
There is clearly a big unknown because of what happened with the tightening of policy, especially on the population. real estate market and credit. But if I put it as a whole and I look at the policies that the Chinese government announced this past week is trying to support consumers. I think in the spring I’ll be in the camp that things in China can at least cyclically surprise next year.
The Indian economy went through a heavy shutdown for about three months but when it reopened, the demand for revenge shopping and shopping was hugely pent-up. Attitudes towards spending at the consumer level have changed. If China opens up in 2023 at some point and we are talking about over a billion people, could that lead to a world of very different needs in 2023? Will things start to zoom in and could it lead to inflation fears again?
If China improves especially driven by its consumers, it will certainly be quite a positive thing for some other economies, especially the consumer goods exporting economies in Europe. ASIAN.
I’m really focused on that but it’s also true that it could mean an increase in China’s demand for goods including energy, which really depends on consumption patterns. improved that the Chinese made. If that’s more to do with the use of even faster internet shopping and not necessarily more personal travel, it might not be as consequential for goods.
Of course, if real estate remains under pressure that will limit some demand for some housing-related items. So I don’t want to take a too strong of a stance on that but you’d think on the sidelines if China came back stronger, surely the massive drop in commodity prices that’s taken place in recent months would come to an end. terminated and that may be why the banking center will be very cautious.
I would go back in time and back in time almost a decade when you coined the acronym BRIC and to be honest, if you look at the progress of the BRIC countries you think are strong BRIC economies and will be the strongest BRIC economy for the next five years?
Well, it’s actually been 21 years since I first brought the acronym into the discussion and so if I look back it’s very clear that China has easily become the most successful of them all. relative and absolute as I mentioned. Today, it is twice the size of all the other BRIC countries combined. Of course, India is doing pretty well but it hasn’t reached its full potential during that period but it is doing well enough to be the fifth largest economy in the world and of course Brazil and Russia was a big disappointment, especially in the second decade.
As I look ahead to the next five years, I think it’s very difficult for me to avoid the conclusion that India really has the most prospects. What’s really interesting since COVID is that India has weathered it pretty well despite a lot of challenges facing India’s education and health system as well as many other issues.
There are several aspects of the Indian economy that have ostensibly surprised me, especially how it has coped with this period of massive energy surges and how it seems to be. are increasingly applying new technologies to combat climate change.
If you put all this together with the huge positive dynamics of the workforce, I think in theory the next 5 years look pretty good for India and if I put it in the context of the BRICs as the decade As this unfolds, India will be in a position like us by the end of the decade as the third logistics nation in the world. So it is quite interesting for India.
For China, there are huge challenges that we’ve talked about but I think it’s more likely that they will do better in the next two years than they did in the last two years, which is going to be difficult in some ways. . But I worry that unless President Xi becomes more business-friendly and somehow we have an improvement between China and the rest of the world, China may be past its prime. absolute best growth and it may only grow or grow by about 3% to 4% on average this decade, which means that India will almost certainly outgrow China.
I just want to highlight a concern, a very obvious concern that if the Indian economy has to grow from 3 trillion to 5 and 5 trillion to 10 then the energy needs of the country will be huge. They will be large, and as per capita increases, so will your energy consumption. India is still dependent on energy whether it is gas or oil and solar power and alternatives are still far away. Do you think this could be the biggest obstacle facing India?
If you look at what has happened to global activity, global energy use, and global gas prices despite the scale of the damage in the ongoing war in Ukraine, European gas prices have fallen more than half. They have peaked and there is growing evidence that many European countries have improved quite rapidly what we call energy efficiency by using less energy for the same GDP growth. .
Obviously a big concern as India gets bigger and goes from 3 to 5 and 5 to 10 trillion its carbon footprint will be bigger but I wouldn’t rule out the possibility of the reverse. When this is over is an extremely exciting period for more efficient application and a brand new set of alternative energy in India.
I will shift gears and perhaps change the scope of the discussion and I will add more ingredients to the melting pot. How do you see the geopolitical situation evolving? I’m not talking about war, I’m talking about the big blocks here whether it’s NATO or what’s happening with the Quad, the G-20. How do you see the big blocks currently moving in 2023?
What I wanted to say at the outset is that once again as this year comes to an end, it will be interesting to observe how India itself navigates these very challenging and complex geopolitical or positional issues.
In some ways, India is leading by example of how you navigate between these great forces of China and the US and it seems to have done quite well. But these problems will not go away. Let me start off by saying how China’s response to this possible COVID contagion could relate to the next stage of this challenging spirit of global cooperation evolving. .
It would be a really bold and smart thing for the Chinese to actually consider importing large quantities of the best Western vaccines, which would send a very different message about what China wants. wants to really cooperate on global trade and will almost certainly force a more open approach and a more positive response from Washington and perhaps European capitals as well.
So if we have an improvement in trade and investment between China and many other Asian countries, that will boost Asian trade and world trade, which will be spectacular.
We need some new kind of initiative and some new ways of thinking to break through this rather tiring, frustrating, and somewhat boring confrontation between the United States and the G-7 countries. It is very clear that we live in a world where these important countries do not share cultural or political beliefs and we need only get along with it and find ways to cooperate when we believe it is. It’s in the best interest to have some sort of battle to see which side is better because that won’t be a win-win situation.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own. These do not represent the views of The Economic Times. )