India, emerging economies to be on growth path: report
Press Trust of India / New Delhi Dec 17, 2009, 14:59 IST
The economic and financial status of emerging market economies like India will continue to improve in the days to come and the recent downturn will help accelerate the trend, says a report.
"The (BRIC) economies' increasing size will be making itself increasingly felt in the world markets, ranging from trade and investment to commodity markets," Deutsche Bank said in a research report.
The report added that the economic and financial crises will help accelerate and intensify these trends.
The BRIC economies of Brazil, Russia, India and China, already ranked among the top 10 on a PPP (Purchasing Power Parity) basis -- a criterion for an appropriate exchange rate between two different currencies --, are likely to clock significant growth in future.
The impressive economic growth rates and greater participation in global trade and financial flows by the BRIC economies are re-shaping the global economic and financial architecture of these economies.
The rise of the BRIC economies will alter the global political, economic and financial realities so much so that China is likely to replace the US as the World's largest economy by 2030, Deutsche Bank said.
Meanwhile, a separate survey by London-based independent think-tank Legatum Institute has indicated that that India is likely to be the world's most important economic power by 2030.
The Deutsche Bank said continued global financial integration would turn the BRIC countries into significant sources of FDI.
Also, their increasing economic weight is being felt politically, with countries like Brazil and India aspiring to a permanent UN Security Council seat.
"China's and Russia's international status has been enhanced due to their substantial holdings of government controlled foreign assets," the report added.
At present all the four economies carry at least one investment grade rating. The BRIC economies are becoming a mainstream asset class and attract long-term strategic investment from dedicated and investors.
"The BRIC countries will grow faster, their debt burdens and fiscal deficits are lower and their net external asset position is often more solid than that of developed markets," the report said.
However, the financial markets of the BRIC economies lack the breadth and depth of their counterparts in the developed economies.
Regarding this, the Deutsche Bank said the BRIC authorities would continue to open their markets to international investors, "albeit gradually".
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