After returning from India last week, one of the main differences in the conversations going on between business here in the UK and in India is the way growth is discussed. In the UK the talk is of recovery, in India the talk is all about how much the economy will grow this year. Discussion in India is optimistic, rather than the UKs current trend of Pessimism. The Federal Government of India is Predicting a return to growth of around 7% this year. The Chairman of ICICI bank is even more optimistic predicting India’s growth rate to be at 10% by 2011.
Much of this optimism comes from the changes we see in India, firstly the county never entered recession as the West did, there was only a slight drop in Growth. Secondly, the improvements to the country’s infrastructure are dramatic; the road network for example is almost unrecognisable from only 15 years ago. Entrepreneurs across the county are all looking for new opportunities, both national and international and the demand for luxury consumer goods in India is increasing year on year.
Ironically there is talk of Bonuses in the Indian Media, but it’s not focused on Bankers, rather IT companies. The rate of Growth in the IT sector has been much higher than expected over the last year, Tata Consultancy for example plan a 150% bonus pay out for 2010.
They are not the only company in the sector revealing higher than expected profits, nor is the IT Sector alone in displaying stronger than predicted results, the economic prospects for the coming year in India look great.
Showing posts with label recession. Show all posts
Showing posts with label recession. Show all posts
Monday, 25 January 2010
Wednesday, 6 January 2010
What will 2010 bring?
Contrary to all expectations at the beginning of the year 2009 ended with a majority of the developing nations in surprisingly strong economic positions. Most of the largest developing nation stock markets have recouped all the losses made in 2008, and countries such as China and India have avoided recession all together, only experiencing reduced growth. 2010 will have a much greater emphasis on the G20 and the BRICs countries than we have ever seen.
Recovery in the developed nations will now depend much more on how the consumer acts in India, China and other emerging markets. Demand for imports of high value manufactured goods from the BRIC countries can help drive forward recovery in western countries. There is evidence that Germany, France and Spain are enhancing manufacturing capacity to match the increasing demand from India and other countries, I hope the UK will follow suit.
Energy is going to be an important sector in 2010 as we move more towards clean technologies it will create new manufacturing opportunities in both the developing and developed world. Infrastructure represents a similar opportunity, the high demand in India and Africa will create opportunities for specialised companies in the western world. Africa will be the focus of a push for increased global agricultural production.
As Developing countries return to stronger growth they will help push the whole of the global economy out of recession. Consequently, how the developing world manages its economies will have a much greater impact on the western countries than ever before.
2009 was not the end of globalisation as some predicted, rather, we have seen just how linked the world economies have become. Globalisation will now be driven more by the BRIC countries, the G20 and the developing world than before, so it is in all our best interests to see the Developing world do better.
In this light I hope that 2010 will see a successful conclusion to the Doha Round of trade talks, this will depend much on the level of emphasis the developed countries put on it. In 2010 I think the major difference will be in the respective importance of the G20 and G8. The G20 will come to the fore on most Global Issues. There has been a reversal that will be all the more obvious in 2010, for the last 2 decades the consumer in the West has been buying from the manufacturer in the East, now it is the Consumers in Asian Countries that will drive forward the next stage of globalisation.
Recovery in the developed nations will now depend much more on how the consumer acts in India, China and other emerging markets. Demand for imports of high value manufactured goods from the BRIC countries can help drive forward recovery in western countries. There is evidence that Germany, France and Spain are enhancing manufacturing capacity to match the increasing demand from India and other countries, I hope the UK will follow suit.
Energy is going to be an important sector in 2010 as we move more towards clean technologies it will create new manufacturing opportunities in both the developing and developed world. Infrastructure represents a similar opportunity, the high demand in India and Africa will create opportunities for specialised companies in the western world. Africa will be the focus of a push for increased global agricultural production.
As Developing countries return to stronger growth they will help push the whole of the global economy out of recession. Consequently, how the developing world manages its economies will have a much greater impact on the western countries than ever before.
2009 was not the end of globalisation as some predicted, rather, we have seen just how linked the world economies have become. Globalisation will now be driven more by the BRIC countries, the G20 and the developing world than before, so it is in all our best interests to see the Developing world do better.
In this light I hope that 2010 will see a successful conclusion to the Doha Round of trade talks, this will depend much on the level of emphasis the developed countries put on it. In 2010 I think the major difference will be in the respective importance of the G20 and G8. The G20 will come to the fore on most Global Issues. There has been a reversal that will be all the more obvious in 2010, for the last 2 decades the consumer in the West has been buying from the manufacturer in the East, now it is the Consumers in Asian Countries that will drive forward the next stage of globalisation.
Wednesday, 25 March 2009
Africa to buck recessionary trend
While visiting East Africa last week I had the opportunity to meet with both President Museveni of Uganda and President Kagame of Rwanda to discuss the global financial crisis. It is apparent that there is a lot of innovative thinking going on in Africa right now, around how to resist the severe impact of the Global crisis and maintain the flow of FDI.
A Recent article in Time Magazine ‘Africa a Business Destination’ demonstrated this, reporting that while ‘Africa, usually the poorest performing region in the world economy, is now likely to be among the best-performing’. A consequence of not venturing into the derivatives markets or subprime lending as the west did has left the continent relatively immune to the Global Crisis. While recent the latest estimates for global growth this year look bleak, the same article reports that Africa will ‘buck the recessionary trend’ and grow over 3% this year.
New ideas are emerging regarding investment in Africa in sectors such as Agriculture, Infrastructure and ICT. It is a new reliance on business as cash rich countries such as China and the Middle East look for new markets in which to invest, that will fuel this growth. Even the Investment funds in the UK, Europe and the US are beginning to take serious notice of Africa as an investment destination, practically the agriculture sector.
A Recent article in Time Magazine ‘Africa a Business Destination’ demonstrated this, reporting that while ‘Africa, usually the poorest performing region in the world economy, is now likely to be among the best-performing’. A consequence of not venturing into the derivatives markets or subprime lending as the west did has left the continent relatively immune to the Global Crisis. While recent the latest estimates for global growth this year look bleak, the same article reports that Africa will ‘buck the recessionary trend’ and grow over 3% this year.
New ideas are emerging regarding investment in Africa in sectors such as Agriculture, Infrastructure and ICT. It is a new reliance on business as cash rich countries such as China and the Middle East look for new markets in which to invest, that will fuel this growth. Even the Investment funds in the UK, Europe and the US are beginning to take serious notice of Africa as an investment destination, practically the agriculture sector.
Wednesday, 10 December 2008
Extraordinary solutions to extraordinary times, my ideas to help the UK economy through the financial crisis
Speaking to the CBI in November this year, Gordon Brown said “All over the world, policy makers are leaving behind the solutions of yesterday and recognising that extraordinary times require extraordinary actions”. While I expect the most effective solutions to the current crisis will be monetary and regulatory in nature, I propose a couple of ‘out the box’ ideas that I believe will help the most vulnerable in society while hopefully reducing the impact of oncoming recession.
The creation of community banks
Small businesses account for more than half of Britain’s GDP and employ more than 13 million people across the country. I believe the government should promote the formation of strategically placed community banks to help ensure a fair supply of credit to small businesses. These banks could be run by healthy banks (HSBC, Santander) in equity partnerships with government who can target them at specific geographic areas ensuring the most vulnerable groups get the help they need.
A Government sponsored asset manager
I think it would be sensible to establish a Government Sponsored Asset Manager whose sole mandate would be to bid and purchase illiquid and distressed assets from banks. Many assets on bank balance sheets are mispriced owing to the near failure of trust in the interbank lending market. An independent entity that is a ‘buyer of last resort’ – one that has a mandate to analyse and make last bids on those assets – would allow troubled banks to improve solvency. The creation of such an entity should be considered within the context of regulatory reform of financial markets.
There will be more suggestions soon....
The creation of community banks
Small businesses account for more than half of Britain’s GDP and employ more than 13 million people across the country. I believe the government should promote the formation of strategically placed community banks to help ensure a fair supply of credit to small businesses. These banks could be run by healthy banks (HSBC, Santander) in equity partnerships with government who can target them at specific geographic areas ensuring the most vulnerable groups get the help they need.
A Government sponsored asset manager
I think it would be sensible to establish a Government Sponsored Asset Manager whose sole mandate would be to bid and purchase illiquid and distressed assets from banks. Many assets on bank balance sheets are mispriced owing to the near failure of trust in the interbank lending market. An independent entity that is a ‘buyer of last resort’ – one that has a mandate to analyse and make last bids on those assets – would allow troubled banks to improve solvency. The creation of such an entity should be considered within the context of regulatory reform of financial markets.
There will be more suggestions soon....
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