Emerging giants India and China are leading the global economy on a ’32-62-72’ growth path, Standard Chartered Bank’s Chief Economist has said — using the numeric phrase for evolving economic size of the world.
“Despite the crisis in the West, the world economy continues to grow, led by the likes of China and India.
“32-62-72’ is the phrase that I use to describe this,” says Mr Gerard Lyons, Chief Economist of the global banking giant.
Explaining the phrase, Mr Lyons said the world economy had grown from $32 trillion in 2000 to just under $62 trillion on the eve of the crisis and, in nominal terms, it is set to reach $72 trillion at the end of this year.
“The shift in the balance of power continues to make the global economy bigger and, in doing so, provides markets for countries and firms in the West to sell into,” Mr Lyons has written in an internal publication of the bank, Standard Chartered Asia Focus.
While acknowledging the contribution of emerging countries such as India and China in the global economic growth, he also noted that there was need to implement reforms and to move up the value curve in the developing economies.
“This period of global change is also an opportunity for countries to make structural changes, whether it be the need to address low productivity rates in a number of Western economies, or the need to implement reforms or move up the value-curve across the emerging world,” he said.
“This group (emerging world) is not immune to what happens elsewhere but is much better able to cope. Yet, in just looking at what has happened recently across economies as diverse as India, China, Brazil or Indonesia, it is clear that while the longer-term outlook is positive, there will be setbacks along the way.
“Sometimes these may be significant, other times they may be easier to manage. Thus, the key is to focus on a combination of economic fundamentals, policy and confidence,” he said.
While Mr Lyons did not mention any specific cases, concerns have been raised in the recent past about a slow pace of economic reforms in India, including in the areas of foreign investment rules and taxation.
“In this global environment it is important not to lose sight of a number of key factors. One is that there are still considerable risks out there; hence the fear of a ‘perfect storm’ in 2013.
“Second, the economies in the West are still finding it hard to work off all the excesses of the past, and these challenges are not being helped in Europe by the slow and, at times, stubborn political process,” Mr Lyons said.