New Delhi, September 13: The unprecedented revamp in the global economic order after the demise of Lehman Brothers a year ago is expected to see increased clout for India and China in global affairs.
Analysts feel that gradually emerging markets, especially India and China, two of the world’s fastest growing economies, would have a greater role to play in charting international economic policy co-ordination.
“They (India and China) have surprised the world by maintaining strong growth rates,” Sherman Chan, who is an Economist with financial services firm Moody’s Economy.com said.
“Both should have a greater say in global affairs over time, but this should be due to their growing contribution to the global economy rather than their role in supporting the global economy during the crisis,” Chan noted.
India and China have witnessed good growth despite the raging financial turmoil that has pushed many industrial nations deep into recession.
“We expect emerging markets (including India and China) to have a greater role in shaping global economic policy co-ordination, but it will continue to be a gradual process,” James McCormack, the Head of Asia-Pacific Sovereign Ratings at Fitch Ratings said.
McCormack noted that there has been a trend of economic power shift more towards emerging markets as they avoided the worst of the global downturn.
“To be sure, there has been a trend increase in the role of emerging markets…,” McCormack added.
India clocked a GDP growth of 6.1 percent in the June quarter while Chinese economy expanded 7.9 percent during the same period.
Moreover, India’s factory productions rose for the second month in a row growing by 6.8 percent in July against 6.4 percent a year ago.
Pushing the global financial system into a tizzy, then famed Wall Street entity Lehman Brothers went bankrupt on September 15, last year.
According to Subir Gokarn, who is the Chief Economist at Standard & Poor’s (Asia-Pacific}, the domestic fundamentals of India are strong, which has helped the country to withstand the crisis with “least damage”.
Gokarn said that at the macro level, India has a fair amount of resilience and that as a whole worldwide, economic growth is slowly stabilising.
While industrialised nations like Germany, Japan and France have exited recession, the American economy is slowly showing signs of recovery. The US GDP contracted less at one percent in the second quarter and the pace of job losses has declined.
In terms of fall out of the crisis, analysts feel that everyone would now be more cautious.
“I think everyone has learnt a lesson from the global turmoil in the past year or two. Government bodies have learnt the importance of adequate regulation and businesses have seen the consequences of excessive risk taking,” Chan said.
–Agencies