The following is a guest blog post:
GDP and Recent Signs of Growth
According to Trading Economics, India’s yearly GDP made a staggering growth early this year of 5.5%, which was shy of 1.1% of the previous quarter of growth. Though India has been holding its own and growing since early 2014, it showed less consumer demand overall. India’s GDP for 63 years, from 1951-today, has grown steadily at 6.21%, according to the report. However, looking back to 2010, India reached a high mark and watershed year when the AGR rose above more than half a century’s steady growth to 11.40%; on the other and, India reached a shallow and lulled at -5.20% in the AGR in late 1979.
Politics and Growth
While the Indian rupee has seen steady depreciation, it is expected to weaken for another half-year, which is tottering on the advent of the national elections of a new prime minister. Though the rupee is at a low rate now, it is expected to rise from 72 points to 75 and while the dollar is expected to remain strong over the rupee, but as little as 5%. Investors are encouraged to purchase the rupee since the gap between the dollar vs rupee is expected to close later next year. With the growth of the rupee on the rise, the gap between the US dollar and the rupee will see some decrease. It might be prime time to invest in the rupee as it begins its rise in value. Many analysts believe the depreciation of the rupee on the international market is due to the global economy and not showing signs caused by the local Indian economy which, as said earlier, has increased steadily above 6.0% annually.
India shipped more than $323 billion of goods to outside countries, Asia (49.3%), Europe(18%), Africa (8.3%), Latin America (2.9%), and Australia (1.7%). India’s greatest exports came from mineral fuels ($48.3 billion), gems and precious stones ($40.1 billion), machinery and computers ($20.4 billion), vehicles ($18.2 billion), and organic chemicals ($17.7 billion). Among the many mineral fuels which are exported, it affects the oil markets globally. In 2018, India exported $46.8 billion for its petroleum oil reserves and it showed a 34.2% increase over the previous year. The higher price of crude oil may hurt India, but because the exports from Iran are decreasing because more companies are asked to boycott those exports from Iran, it may have a positive effect upon countries like India that export oil and cause an increase per barrel.
Precious Gems and Oil Reserves
India is rich in natural precious gems. As shown above, most of its exports came from mineral fuels or precious gems and stones. India shows a very strong export in its pharmaceutical production, which is up 10.2% since 2017 at a total of $12.2 billion. India has more than fifty companies on the Forbes global ranking, which shows great potential for further growth. Whether the Indian economy’s inflation will cause a decline in the economy, it is not seen at present.
Sustainable Growth and Trade War
Another reason that that the rupee may increase in value is because of the recent news that the Federal Reserve may give a hike to its rates from 1.75% to 2.0%. This hike, along with the encouragement of domestic economic growth, may have a positive impact between the Indian rupee and the US dollar. Many investors are looking towards the low rate of the rupee in the current economic growth as a plus, which allows them to invest when the rupee is low and sell when it is high. This is especially true if President Trump’s trade war continues against China. The economic analyst sees an upside in this since the tariff’s against China are not considered to be sustainable, especially on the heels of a presidential election in 2020, which gives a potential to make huge changes to the global economy and the reduction of tariffs against China.
Promises of Strong Growth
There are many circumstances that affect India’s economic growth: its exports, a strong potential to grow from its rich natural resources, the steady growth of its economy, the current political climate, the low rate of India’s unemployment, as well as the signs of the rupee. To close the gap between itself and the US dollar in value, India shows that it is set for another year of steady growth.