India, China unlikely to be growth poles for global economy: UNCTAD Report
According to UNCTAD’s recently released Trade and Development Report (TDR) 2017, India and China at their current levels of growth will not serve as “growth polls” for global economy in near future.
TDR is flagship report of the United Nations Conference on Trade and Development (UNCTAD) and is treated as a barometer for assessing the global economic climate.
Key Highlights of report
Global Economy: The world economy in 2017 is picking up but not lifting off. The global growth is expected to reach 2.6%, well below pre 2008 financial crisis average of 3.2%. Unregulated finance remains at heart of present hyper-globalised world and failure to tame it and address deep-seated inequalities, generated by it threatens efforts to build inclusive economies.
The report calls for serious examination of market power, rent-seeking behaviour and winner-take-most rules of the economic game, which have generated exclusionary outcomes. It outlines global new deal to build more inclusive and caring economies by combining economic recovery with regulatory reforms and redistribution policies with high speed and requisite scale.
India and China: At current levels of growth, both Asian countries are unlikely to serve as “growth polls” for the global economy in near future.
India’s Growth: It is likely to slow down to 6.7% in 2017 from 7% in 2016. India’s growth performance depends on reforms to its banking sector to a large extent, which is burdened with large volumes of stressed and non-performing assets.
The informal sector, which still accounts for at least one-third of India’s GDP and more than four-fifths of employment, was badly affected by the government’s ‘demonetisation’. It may be further affected by rollout of Goods and Services Tax (GST) from July 2017,
China’s Growth: It has been retained at 6.7%, same as in 2016. Gradual slowdown of China is expected to continue as it moves ahead with rebalancing its economy, towards domestic markets. China’s estimated debt-to-GDP ratio is 249%. China needs to introduce measures to contain its rising debt as domestic demand could be squeezed, with adverse consequences.
Advanced and Developing economies: The main obstacle to robust recovery in advance countries is fiscal austerity, which remains default macroeconomic option. Capital inflows to developing countries have remain negative, albeit less so than in recent years. Unforeseen events also can knock recovering economies off balance.
UNCTAD is principal organ of United Nations General Assembly (UNGA) dealing with trade, investment, and development issues. Its goals are to: “maximize the trade, investment and development opportunities of developing countries.” It organizes World Investment Forum. It publishes reports like World Investment Report, Technology and Innovation Report.