India escapes the worst of emerging markets misery
Brazil and Russia lie deep in recession and South Africa is teetering on the brink after demand for raw materials collapsed.
Three years ago India was the weakling of the emerging markets clan, politically stagnant and struggling to grow - but as gloom engulfs other developing economies, the subcontinent is enjoying a moment in the sun.
Brazil and Russia lie deep in recession and South Africa is teetering on the brink after demand for raw materials collapsed, while alarm bells have sounded over fears the China juggernaut may be faltering.
Enter India, once dubbed the Broken Bric, as the core group is known, now poised to become the fastest-growing G20 economy, expanding at a respectable seven percent, with its finances nourished by cheap oil.
"If you look at the growth numbers, India is definitely doing better than these other economies," Kunal Kundu, an economist at Societe Generale in Bangalore, told AFP. "China is in slowdown mode and Brazil and Russia are in trouble because they are commodities-dependent. We are seeing India as the standout."
It is not all rosy - while low-cost oil and a new way of calculating growth have added shine to India's GDP figures, its exports remain poor and shares on the Bombay Stock Exchange languish five percent below a year ago.
Economists say underlying growth remains fragile, and question whether the re-calculated figures that show India's growth rate has caught up with China's can be trusted. But as turmoil convulsed global markets this summer, wiping trillions of dollars off world exchanges and leading investors to flee emerging economies, India has escaped comparatively unscathed.
"India is looking like an oasis of stability at the moment," said Mark Williams, chief Asia economist at Capital Economics in London. "It is a very different picture from a couple of years ago when India was at the forefront of concerns."
Next to its fractious emerging market cousins, politically-stable India looks positively glowing, named by the IMF as one of the few "bright spots" in the world economy.
Low commodity prices are a gift: while cheap crude has pummelled exporters, India, which imports 80 percent of its oil needs, won the lottery. The ensuing cash windfall has helped the government balance its books and made it less reliant on foreign loans.
"India is in a much better position, we don't have some of the problems the other economies have," said Arya Sen at Jefferies investment bank in Mumbai. "Not only that, we are probably going to see an acceleration in growth which is very rare at the moment."
India escaped much of the recent global turmoil because it exports relatively little - meaning it does not make enough goods people want to buy, isolating it from the wider economy.
Labour and investment laws remain agonisingly complex, hindering growth, while outdated infrastructure is badly in need of funds.
And while politicians trumpet a growth rate that now rivals China's, economists warn India is still a chronic underperformer.
Stocks at two-week high
India's benchmark stock index advanced to a two-week high after factory output and inflation data signalled an improving outlook for Asia's third-biggest economy.
The Sensex climbed one per cent to 25,856.70 points at the close, extending last week's 1.6 per cent increase. The India VIX index fell 2.6 per cent. The 50-stock CNX Nifty Index rose 1.1 per cent to 7,872.25 points.
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