Posts Tagged ‘BRIC’

Indian Economy Set to Become World 3rd Largest in PPP Category

Indian Economy Set to Become World 3rd Largest in PPP Category

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According to a latest report by consultancy firm PricewaterhouseCoopers (PwC), India could move into third place in the individual country GDP ranking in the purchasing power parity (PPP) category ahead of  Japan in 2012.

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This report projections stand against the Goldman Sach’s projection of 2032 in its BRIC’s (Brazil, Russia, India, China) report.

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China, which was projected by BRIC’s report to overtake the US as largest economy by 2041, looks set to achieve this by sometime around 2020, the PwC report said.

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“It seems highly likely that by 2030, China will clearly be the largest economy in the world on this measure (PPP), ending over a century of US economic hegemony,” top official of PwC, said in the report.

It said the credit crisis has accelerated the pace at which the emerging economies will overtake the developed ones.

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The report also projected that India is likely to grow faster than China after 2020.

“This is because of India having a significantly younger and faster growing population than China, and also due to it having more catch-up potential as it started from a lower level of economic development than China,” it said.

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However, the report cautioned that India will only realize this if it continues to pursue growth-friendly economic policies of the last two decades.

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As per the report by 2020, it is projected that seven largest emerging economies, E7 (China, India, Brazil, Russia, Mexico, Indonesia and Turkey) would be overtaking the G7 (US, Japan, Germany, UK, France, Italy and Canada) economies.

This will lead to a tectonic shift in the global economic power.

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India’s Investment in the US Bonds Stands Lowest Among BRIC Nations

India's Investment in US Bonds Stands Least Among BRIC Nations


India
stands least exposed among the other BRIC nations with respect to their respective foreign exchange reserves.

This is in addition to the recent development where it got evident that India has reduced its investments in US Treasury bonds between May and September.

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India’s investment in the US bonds stands at $35.90 billion as per the latest data released by the US Department of Treasury on November 17, as on September 30.

However, India’s investment in the US bonds is the lowest among all BRIC nations.

China’s investment in the bonds remained the highest at $798.9 billion.

Brazil’s exposure was $144.90 billion, followed by Russia at $121.80 billion.

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In terms of percentage of exposures to the US bonds to each of these economy’s total foreign exchange reserves also, India was the lowest.

India’s exposure to US bonds was 12.81 per cent of its forex reserves of $280.34 billion in September compared with

64.63 per cent of Brazil, 35.15 per cent of China, and 29.46 per cent of Russia.

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India’s forex reserves and US bond investments ratio improved during the period between May and September this year as its forex reserves went up.

In May, the ratio was 14.79 per cent on the forex reserves of $262.31 billion.

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Mr Jagannadham Thunuguntla of SMC Capital said: “With less exposure to US treasury bonds, India stands least vulnerable to US dollar depreciation in comparison to its BRIC peers”.

The current trend showed that though China and Russia too reduced their vulnerability ratio during May-September, Brazil increased it, Mr Thunuguntla said.


Brazil has forex reserves worth $224 billion, while Russia has $413.45 billion.

China has $2,272 billion foreign exchange reserves.

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