Recently, the World Bank forecasted that the annual economic growth rate of India would likely surpass that of China’s for the year 2015 with 7.5% against 7.1%. Thus for the first time, explained Chief Economic Kaushik Basu, India will dominate the economic growth chart of major economies.
Now that the growth expectations regarding China have been lowered – 6.4% in 2016 according to Goldman Sachs – and that Chinese financial markets have raised concerns, investors could shift from China to India. Once again, be careful.
Such a sudden enthusiasm is focusing on the economic growth rate but seems to be underestimating the political and structural difficulties of India’s economy, which is clearly growing but remains far from China’s capabilities. Quite optimistic is the one who thinks India’s economy could stay immune to a Chinese crisis.