Econintersect: China has reported indications of continued strong growth in recent data reported by GEI News, with monthly YoY gains in industrial value added (+13.3%) and retail sales (+16.9%). But India is also showing signs of strong growth. First quarter advance tax payments from India’s top 100 companies are 14% higher compared to last fiscal year and total corporate tax receipts are up 15% (The Times of India). Both India and China are experiencing monetary tightening as the two countries are trying to tame mid-single digit (China) and high-single digit (India) inflation. But both countries are continuing to show persistent economic growth.Much of the rest of the world is suffering under slowing economic growth, which was tepid to begin with. From Reuters:
While China and India took new steps to calm fervent and inflationary economic expansions, Western powers have been preoccupied with attempts to defuse fiscal time-bombs in Greece and possibly the United States against a backdrop of tepid growth.
…..unlike in major emerging powers, which have managed a sustained and forthright policy of tightening interest rates to counter high inflation, Western central banks have shown no such coordination.
The major powers in the west have a different set of problems that the emerging Asia powers. According to Kurt Karl, chief U.S. economist at Swiss Re in New York, quoted by Reuters:
“Two key downside risks have increased over the past few months — the risk of a disruptive default in Greece and of a significant slowdown in the U.S”
There are concerns, however, that the apparent strength in India and China may not be sustained. According to the Reuters Asia Corporate Sentiment Survey June 2011:
Business sentiment at Asia’s top companies fell in the second quarter, hitting its lowest since the third quarter of 2010 as rising costs and growing doubts over the strength of the global economy weighed business sentiment.
Article by Sanjeev Kulkarni
Sanjeev Kulkarni is an entrepreneur based in Pune, India. He worked for large organizations in board level position before venturing on his own. He is currently involved as an investor in health care software company and as an investor, mentor in an automation company. Very widely traveled, he has experience of working in different geographical areas with people of varying nationalities. He did his BS from Indian Institute of Technology, Delhi.