Can India become an economic superpower? | Counting the Cost

Can India become an economic superpower? | Counting the Cost

[Music] [Music] hello I’m Adrien Finnean and this is Counting the Cost on Alazer your weekly look at the world of business and economics this week it’s the world’s fastest growing major economy india’s growth has recently outpaced forecasts despite global and local headwinds but can the nation become an economic superpower wooing Latin America China deepens its economic ties with nations across the continent as the trade war with the US escalates but will Latin America pick sides between Washington and Beijing and turning on the taps the world’s largest group of oil producers says that it will fast track oil output but what’s behind OPEC plus’s decision and will that send crude prices much lower prime Minister Narendra Modi aims to transform India into a developed nation by 2047 the country continues to be the fastest growing large economy and is poised to take over Japan as the world’s fourth largest economy in a recent boost to Mod’s government India posted its best quarterly growth in a year but critics question whether that really translates into improved outcomes for all of India’s people they’re calling for deeper reforms to boost the nation’s competitiveness and to sustain that robust growth so will India be able to realize its dreams of ranking alongside the US and China and possibly replace Beijing as the world’s factory or could global and domestic challenges still hold it back we’ll discuss all of that with our guest shortly but first a report from Joel Evans in the first three months of 2025 India’s economy grew by 7.4% 4% strong activity in agriculture steady public spending and a demand from rural communities as well as a boom in construction sector have contributed to the positive figures this is a very strong GDP growth in Q4 and the strongest in this uh financial year this also marks a rise from 6.2% in Q3 to 7.4% india’s economic success has some asking whether it might benefit from the Trump administration’s trade war with China and a possible longerterm strategic decoupling amid the turmoil and uncertainty New Delhi has ambitions to replace Beijing as the world’s manufacturing hub its huge workforce and location are two of the country’s unique selling points but it’s had limited success in attracting shifting investment from China a tough business climate and red tape have long frustrated foreign investors and stalled the country’s manufacturing growth with its share of GDP stuck at 15% for two decades and the economy has failed to generate enough jobs for India’s expanding young population new Delhi is currently negotiating its own trade deal with the US trump announced a 90-day pause on his long planned reciprocal tariffs although a 10% base tariff continues to apply to countries including India because of Trump’s tariff announcement there is an atmosphere of uncertainty the speed at which we’re getting orders has gone down considerably after the announcement of the 90-day pause and the 10% increase in tariffs experts have argued recent trade deals with western countries are less beneficial to India this kind of negotiation that’s going on okay what has gone on with UK what has gone on etc you know that has been adverse to India in the free trade agreements that we’ve done in the past with South Korea with Australia with the Asan countries it is India which has suffered because our exports have not grown their exports have grown so our imports from these countries have increased more than our exports could increase and that is because in technology terms they are weak us giant Apple indicated recently that it was shifting most of its production of iPhones headed for the US from China to India however trade analysts have cautioned that such a manufacturing investment could yet stall washington and Beijing recently announced a trade reset that could derail India’s ambitions elon Musk’s Tesla announced this week it is not interested in producing cars in India despite the challenges India’s economic growth is forecast to continue albeit at a slower rate of 6% for now its dreams of fully replacing China as the world’s manufacturing hub appear to be a long way off joel Evans Alazer for counting the cost gara Kapoor is a research economist and the executive vice president at ARA Securities that’s a financial institution she joins us now from Mumbai good to have you with us uh Gara um what’s behind India’s continued economic expansion can the government take all the credit here or are there other factors at play what’s the government getting right and and what more could it be doing thank you thank you for having me over i think the biggest credit uh for India’s economic resilience goes to the government largely because in the postcoid era uh India might have been the only country that focused on macroeconomic stability and embarked upon a very aggressive pace of capital creation particularly coming from government spending tamik said that the other factor that probably seems to be working in India’s favor is that in the tariff war between US and China India probably emerges as the only country capable of providing scale and competitive edge in terms of manufacturing and shifting of supply chains along with that government’s resolute focus in ensuring that manufacturing scales up along with a softer and accommodated monetary policy from the central bank of the country that is the RBI all have been working in favor to basically ensure that the growth rates remain supported even as the global backdrop of volatility continues to remain high all right so so lower interest rates are going to help a a lot of people things are looking pretty good for for India right now economically but what are the potential pitfalls you you you mentioned Trump tariffs there so the biggest pitfall for India of course right now is that while India is a beneficiary of the geopolitical climate which is basically pitting US against China uh India also remains um at u at a receiving end of the constant global volatility in terms of Trump’s reciprocal tariffs dig emerging geoeconomics and geopolitical climate more importantly is the fact that uh the current geopolitical climate is going to lead to a significant slowdown in global trade volumes at the time when India is embarking on increased capacity for manufacturing and exports so I think this should be the biggest risk that India should look out for in the near to medium term all right Ga given all all of that uh the IMF predicts that uh India is on track to leapfrog Japan to become the world’s fourth largest economy this year how long before it overtakes Germany to become number three and gives China a a run for its money is India looking to replace China as the world’s factory is that realistic see uh with regards to Japan uh let me quote you some numbers both India and Japan are projected to become economy size of close to $4.2 trillion sometime this year the good point is that India’s economy continues to expand whereas Japan’s economy is facing economic headwinds so the leaprogging of India overtaking Japan will happen anytime this year probably in the middle of the current calendar year that would place India already the third largest economy behind that of uh US and and China now coming to your latter part of your question relating to becoming uh the factory of the world um it is it is it is to be very realistic to be saying that it is difficult to replace China and the scale at which China manufactures and its depth across value chains however the in the the emerging geoeconomics is making it more and more difficult for western countries to depend on one large economy that is of China and hence diversification is the order of the day while India may not be able to raise uh the capacity so much it is going to remain an incremental beneficiary for sure of the diversification we’re almost out of time ga I need a a shortish answer if you can give me one we’re talking about GDP here and let’s face it GDP means nothing to to most people is GDP the best way to measure the health of of an economy it tells us very little uh about how people live and work and how unfairly wealth is distributed within a society how healthy is India’s economy really are all of its people benefiting from this economic growth so while we can debate whether GDP is the best measure for health of the economy let’s not forget that among all large economies India is the only economy that has uplifted nearly 170 million people out of poverty in last 10 years and does direct benefit transfers to the poor accounting to nearly 74 billion yearly so while we may uh there might be pitfalls in the measurement of GDP there is no denying to the fact that uh in terms of inequality and in terms of welfare economics last 10 years India has scored really well okay really good to talk to you Gimma many thanks indeed for being with us on counting the cost thank you for having me thank you a power shift could be unfolding in Latin America the continent has long been considered to be in the US’s sphere of influence but in recent years China has stepped up its efforts to replace it as Latin America’s primary development partner beijing has invested billions of dollars in infrastructure energy and technology projects in the region and has recently moved to strengthen those economic ties even further this as nations across Latin America seek to negotiate better trade deals with President Donald Trump now in May China extended a credit line of more than $9 billion to Latin American and Caribbean countries china also pledged to boost its investments in the region at the fourth ministerial meeting of the China community of Latin American and Caribbean states in Beijing which included the presidents of Brazil Colombia and Chile polling commissioned by the economist suggests that public perception of China in Latin America is improving fast in most places surveyed Beijing is now seen as the more respectful superpower and the more reliable trading partner china is Latin America’s second largest trading partner and the top trading partner for countries like Chile Brazil and Peru according to China’s Ministry of Commerce bilateral trade hit a record high of more than 500 billion US last year china’s direct investment in Latin America reached almost 15 billion US while Latin American companies have established 37,000 enterprises in China as of March this year twothirds of Latin American countries have joined Beijing’s massive belt and road initiative infrastructure program with Colombia the latest to join in May and in a recent attempt to boost trade ties citizens of Brazil Argentina Peru Chile and Uruguay are now allowed to enter China without a visa for up to 30 days for business tourism cultural exchange or transit well many of those travelers going to China will be traveling through Lemur’s new airport peru is banking on a big airport expansion to bring in more tourists capacity is expected to reach 40 million passengers a year that’s almost double the number who went through Lima’s old airport in 2024 but as Colin Baker reports getting to the new facility on the outskirts of the capital could be tricky two new runways a state-of-the-art control tower 46 boarding gates and a so-called airport city that includes hotels and shops lima’s new airport is now among Latin America’s ultramodern air travel terminals this $2 billion investment by German company Frapport GS and its subsidiary Lima Airport Partners is three times the size of the city’s old airport peru’s President Dina Boloarte inaugurated the airport 2 days before it was fully operational today with the inauguration of this airport the most modern in Latin America our country is moving towards the future after mining and agriculture tourism is the country’s third largest industry experts estimate that by 2034 it will contribute $ 31.5 billion to the economy and create tens of thousands of new jobs the construction of the new airport has futureproofed the country’s tourism and travel industry authorities say they’re expecting 40 million passengers a year and some of those will be Peruvians headed to cities like Beijing china has recently allowed citizens of five Latin American countries visa-free travel for up to 30 days as the two regions strengthen ties with the world’s second largest economy a move that has been welcomed by locals i think it would be a good experience to travel there to enjoy both Chinese culture and tourist sites but it’s not all smooth traveling there are security concerns and access to the new airport is presenting a challenge and urban planners say getting to the airport will be a nightmare the highway and metro stations promised by the government have not been built yet the only access is across two temporary bridges commonly used for emergencies which pedestrians do not have access to leaving tourists and nearly 17,000 airport workers to struggle that aside government optimism remains high about the airport’s longerterm impacts colin Baker Al Jazer for Counting the Cost feliparin is an economics professor at the Pontipical Catholic University of Chile and the former finance minister of Chile he joins us now from Santiago it’s good to have you with us sir what do you make of this apparent pivot towards China it’s nothing new is it china’s been partnering with countries in the region for what 20 years or so now this this this can’t be blamed solely on the Trump administration can it this is as you correctly say Adrian this is a trend that started uh over 20 years ago and it’s a a reflection of uh China that has grown uh very fast for many years and we all know what uh China started these reforms in 1978 then you know growing at almost 10% per year for 30 years will get you to be uh get China to be the second economy of the world so and and if you take for example what is happening in in the year 2000 so 25 years ago uh China was an important partner but for us you know let’s say let’s say take Chile about 5% of our exports five 6% of our exports went to China but today almost 40% of Chilean exports go to China Chile is the country in Latin America most exposed to China but it’s not only Chile is as you said before it’s Peru it’s Brazil it’s also Uruguay so if you go to the south of Latin America the most important trading partner for several countries is China if you go to the north is different for Mexico about 80% of exports in Mexico go to the US and if you go to Central America and the Caribbean the US is a more important trading partner for Colombia the US is number one trading partner but going south you see this amazing penetration of China as a trading partner not only as a trading partner but also through investment uh investments and yes the sort of the the cliche story is that China is coming to take control of our natural resources uh but it’s beyond that because it’s it’s in natural resources is in transport facilities and infrastructure it’s in utilities you China has invested heavily in utilities in Latin America so the Chinese presence is very high yeah and so on my view it is not that we have to choose between the US and China this is this is what what I wanted to ask you sir this this this apparent pivot towards China in America’s backyard is it wise i mean how how difficult could could the US could the Trump administration make life for Latin American countries that that that cozy up to China and do more and more economic deals with China the Trump administration has shown that it is ready to use uh uh tariffs to use trade restrictions as part of leverage for different things for economic objectives but also for objectives that go beyond economics immigration um you know drug uh uh you know penetration into the US so we we already know that we were surprised that the Trump administration um you know put a tariff of 10% on several countries that have been for many years partners but not only that then we have trade agreement we have a you know several countries in Latin America have a free trade agreement with the US chile was the first to have that after Mexico in NAFTA and for Chile you know we just u you know we woke up to receive a 10% tariff and we are now under negotiations with good faith with respect but with a firm position that these are unfair tariffs that have been placed in Chile and let me tell you why the and and this is the case for not only Chile but other countries in the region you put a tariff of 10% that was the minimum tariff that was set but Chile has a trade deficit with the US you know and we are a very reliable trading partner we want to be open to trade with the US and with China but it is true that these these tariffs if they keep because they may go away in the negotiations but if they are kept it will be harmful for us in Chile and the region one final question sir to what extent have Latin American countries lost faith in the US certainly as an investment partner uh and and now with the tariffs as as a trading partner what are the pitfalls of getting closer to China could some of the the poorer Latin American nations end up indebted to China in the way that we’ve seen some African countries if you play the cards fairly if you play it open you say mean Chile and several other countries in the region we’re open to trade with the world and we are a reliable trading partner for all our partners uh but it is true that some countries not the case of my country and and others we have not received Chinese loans but we uh we are we have a very significant presence in the last years you know first it was trade but then it came investment you know and uh we welcome investments from all over the world uh we are an open economy we’re an open country and uh so we hope that we can keep in this position you know but of course uh it’s uh you know some countries retaliated to the US of course we didn’t I don’t think retaliation is the curse it’s the course is diplomatic negotiations you know among partners that respect each other and then have you know a free trade agreement signed voluntarily by both parties it’s really good to talk to you sir on counting the cost many thanks indeed for being with us thank you Adrian good talking to you after years of cutting oil production to prop up prices the group of major oil producers OPEC Plus is now doubling down on boosting output the shift in the oil cartels policy is seen as an attempt to win back market share by nations like Saudi Arabia and to punish countries that are overproducing oil the kingdom which has previously shouldered the largest share of output cuts appears to be sending a clear message that it will no longer hold back production if other nations don’t eight members of the Saudiled oil group have recently agreed to boost production for the third consecutive month this as President Donald Trump has pushed for lower oil prices to curb inflation in the US now the group including Russia said that it was acting quote in view of a steady global economic outlook and healthy market fundamentals opec plus will increase production in July by a combined 411,000 barrels per day matching increases scheduled for May and June the oil cartel aims to bring back 2.2 2 million barrels a day of output that it has idled in recent years in a process that was previously planned to last until late 2026 well oil prices rose to almost $65 per barrel immediately after that decision on geopolitical concerns since Donald Trump took office in January the price of the international benchmark Brent crude has fallen by around 15% to nearly $64 a barrel that’s well below what some oil producing nations need to balance their budgets the International Monetary Fund estimates that the Saudis need prices above $90 to cover their economic plans now should the OPEC plus group opt to pump even more oil prices could drop below $50 if oil falls under $60 a barrel for every dollar below that threshold experts estimate five drilling rigs could be pulled out of US fields hurting the economy of states like Texas gorov Sharma is an energy market analyst with oil holic synonymous he joins us from London good to have you with us now production is one thing export volume is another entirely why has OPEC decided to raise output production uh for the third straight month and and is it going to find buyers for that oil adrian good to be back on the program it’s nice to speak to you again what I would say here is that OPEC the the stance that they have adopted is they’ve been a bit lax they have been too focused on prices and that strategy was not working a lot of people thought OPEC would raise production a lot earlier than it started at this point in the cycle but they finally come around to it and now it’s all about market share to begin with and of course we’ll come to the internal politics uh within OPEC in a moment but I think for for the moment they’re focusing on recouping some of the lost barrels especially of light sweet crude that they’ve lost out in Asia so they make a stance they’ve already said they’re going to go back to the 2 million barrels per day plus and recoup those levels they’ve already with the latest announcements recoup sort of 62% of that production volume they’ve pumped it back into the market or rather will uh from July expect a further increase because I think the Saudis are not in the m mood to sort of draw back they think that they have protected the prices long enough but others have taken advantage yet somehow they’re not finding the wider cooperation within the corridors of OPEC plus so they think they ought to pump more oil okay we mentioned uh OPEC plus’s uh actions possibly hurting consumers elsewhere the companies in in the US for instance who who’ve already mothballled drilling rigs i mean was this designed to hurt anyone i think this is the classic paradox from an American political perspective Mr trump would want lower prices at the pump so when if we see prices plummet towards $50 the it would be price positive for American consumers so you have that we park that to one side you have the US industry and a lot of nonopic producers like Brazil Guyana uh Norway Canada etc wanting higher prices but in the same time Mr trump’s constituency in in Texas that’s get gets dented a bit with the whole drill baby drill thing so US producers need north of $70 but US consumers would want low prices now Mr trump can’t have it both ways i mean he please the consumers but the producers might be in trouble so you’re in that kind of phase where by which it’s it’s a political paradox for the White House all right and and what about the rest of us who aren’t in the United States can can we look forward to lower gas prices soon i I I suspect that this is very price positive for uh for consumers all around the world what you have right now is a lot of nonop oil so demand growth global demand growth is just north of 1 million barrels per day this year that can be serviced by nonopc alone we can just park the OPEC OPEC hikes nonpec can service those alone and for that reason alone there’ll be an awful lot of crude out in the market and and it’s going to play out and the US producers if I may add they’re hedged for the moment for the next six to 12 months they’ll also keep pumping so expect a whole lot of more oil and that means low prices at the pump gav it’s always great to talk to you thanks for making sense of that for us we’ll talk to you again thank you now coffee is of course one of the most consumed beverages every day right around the world but a morning caffeine fix is becoming so expensive over the past year the price of coffee has nearly doubled now there are several factors that are brewing trouble for the industry including climate change and supply chain disruption we spoke earlier to David Oxley the chief climate and commodities economist at Capital Economics and asked him if prices are going to ease anytime soon we have seen prices come down of late so the price of Arabica beans and Robusta beans are currently around 20 to 25% lower than the peak they reached um or record highs they reached earlier this year in February that said I mean to put that into context prices are still about three times higher than they were before the start of the pandemic so yeah there has been some progress partly or potentially because of some of this sort of speculative rough coming out the market um and expectations for the growing um year next year which in Brazil at least starts next month are slightly more positive you know we have the USDA you know a world’s authority on agricultural forecasts and production they are actually forecasting a continued drop in Arab the Arabica crop in Brazil which accounts for about twothirds of Brazilian coffee production but they are expecting a 15% increase in the more um resilient robuster bean and they’re also expecting a pick up in output um of robuster mainly from Vietnam next year right I’m off for a brew that’s our show for this week if you’d like to comment on anything that you’ve seen i’m at a finigan on X please use the hash AJTC or you can drop us a line counting the cost at alazero.net is our email address as always there’s plenty more for you online at alazero.com/ctc that takes you straight to our page and there you’ll find individual reports links and entire episodes for you to catch up on but that’s it for this edition of Counting the Cost i’m Adrien Finnean from the team here in Doha thanks for being with us the news on Alazer is next

Prime Minister Narendra Modi aims to transform India into a developed nation by 2047. The country continues to be the fastest-growing large economy and is poised to overtake Japan as the world’s fourth-largest.

In a recent boost to Modi’s government, India posted its best quarterly growth in a year. However, critics question whether that really translates into improved outcomes for all of India’s people. They are calling for deeper reforms to boost the nation’s competitiveness and to sustain that robust growth.

Also, will Latin America pick sides in the US-China trade war?

And, why is OPEC+ boosting output?

Subscribe to our channel: http://bit.ly/AJSubscribe
Follow us on X : https://twitter.com/AJEnglish
Find us on Facebook: https://www.facebook.com/aljazeera
Check our website: http://www.aljazeera.com/
Check out our Instagram page: https://www.instagram.com/aljazeeraenglish/
Download AJE Mobile App: https://aje.io/AJEMobile

#india #economy #opec #narendramodi #uschinatradewar #tariffs #aljazeera
#aljazeeraenglish #aljazeeranewslive