New Delhi: In a noteworthy development for the Indian economy, India has clinched the top spot in Mint’s emerging market tracker for the fourth consecutive month as of July. The nation achieved a composite score of 66 out of 100, driven by its robust macroeconomic fundamentals. Strong GDP growth alongside a resilient manufacturing purchasing managers’ index (PMI) propelled India ahead of its peers in the emerging markets landscape.
India’s Economic Performance and Challenges
Despite the impressive score, the Indian rupee experienced a slight dip, falling 0.3% month-on-month (m-o-m). However, this did not deter stock markets from demonstrating stability, with market capitalization rising by 2.2% m-o-m. Exports surged by 7.2%, but it’s notable that India lagged behind several other emerging market competitors in this regard. This mixed bag of economic performance raises questions on how India’s export sector can sustain growth amidst global competition.
Take, for instance, a local Indian garment exporter who faced challenges in meeting the rising demands of foreign retailers. While the overall economy shows promise, hurdles in the export domain remain. This scenario exemplifies the complexities involved in navigating the competitive landscape of global trade.
Comparative Insights: China and Thailand
In the rankings, China maintained its second-place position with a composite score of 62. With a stable growth momentum and strong stock market performance, the Chinese economy showcased resilience, buoyed by an import cover of 15.9 months. Analysts note that a broadly stable currency and robust financial buffers have reinforced China’s standing in the emerging markets rankings.
Meanwhile, Thailand climbed two spots to secure third place with a score of 60. Although its GDP growth remained modest, Thailand’s economy received a significant boost from surging exports, which rose 15.5% year-on-year. Coupled with a manufacturing PMI of 51.9, indicating consistent factory activity, Thailand is experiencing a steady economic pulse. Notably, inflation in Thailand has remained subdued at just 0.7%, providing a favorable backdrop for continued economic growth.
The Future of Emerging Markets
According to the Emerging Markets Tracker, which was launched in September 2019, economic activity across 10 large emerging markets is monitored based on seven high-frequency indicators. These include real GDP growth, manufacturing PMI, export growth, retail inflation, import cover, exchange rate movements, and stock market performance. Each of these indicators plays a significant role in shaping the composite score for the economies involved.
The rankings, however, are provisional and will be updated as new data becomes available. The methodology employed in this tracker offers valuable insights — providing a simple average of the seven indicators for a given country. It’s worth noting that while the tracker once included Russia, it has been temporarily removed due to unreliable data following the onset of the Ukraine conflict.
Looking Ahead: Implications for Investors
As global investors closely monitor the health of emerging markets, India’s consistent performance raises both hopes and expectations. The strong composite score underscores a resilient framework within the Indian economy, but stakeholders must also remain vigilant about potential challenges, particularly in the export sector.
For example, a tech startup in India that’s already making waves in the international market might find opportunities in a booming economy, but it also faces competition from established firms in China and Thailand. The narrative of growth isn’t just about numbers; it’s about individual stories like these that illuminate the complexities of growth in an interconnected global economy.
As we move forward, the interplay between inflation, the RBI’s repo rate adjustments, and the overall health of the Indian banking sector will play critical roles in shaping future economic outcomes. Investors should keep a close watch on these dynamics as they can have a significant impact on market movements.
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Original source: www.livemint.com
