Unbelievably, in a time of slowing growth and growing unemployment in developed countries, India boasted of an economic growth rate of 8.8% in Q2 2010 and 8.6% in Q1 2010. The Indian government said that they would like to push the economy’s growth rate up to 9% and eventually 10%. The push for such dramatic growth is driven by the need to alleviate poverty and increase job opportunities for its young population. It is reported that half of India’s population is 25 or younger.
With such high growth potential foreign businesses have invested in the country’s market place. For example, Ford, Nissan and Volkswagen have significantly expanded production capacity in India as car sales climbed 38% in July 2010. While the growth rate potential of India is similar to China, India’s economy is a bit different in that their growth has been driven by domestic consumption. Some articles have named India’s domestic consumption and government fiscal policies as reasons why the country has been far more insulated from the global economic recession.
While the growth rate is quite impressive, inflation still remains as a side effect of such growth. Food, energy and other basic needs have experienced a 10% increase in wholesale prices in recent months. It is expected that the Reserve Bank of India will continue to raise interest rates as inflation continues to rise.
No comments:
Post a Comment