‘India benefits owing to fall in import prices’

December 25, 2015 12:00 am | Updated March 24, 2016 11:58 am IST - MYSURU:

Gita Gopinath, John Zwaanstra Professor of International Studies and Economics, Faculty of Arts and Sciences, Department of Economics at Harvard University, visited MYRA School of Business here and spoke on the important global economic trends and its implications for India.

Dr. Gopinath began by noting that the current economic scenario is in a very interesting phase.

“We are coming out of the recession with the world economy slowly repairing itself with different countries going through different trends in the recovery process; now is a good time to pause and see where the world is heading,” she said.

She outlined four major trends that are currently playing out there in the global economic field —China’s slowing growth; collapse in the commodity prices; the beginning of the end of easy money and the increase in the aging population.

The current scenario of diminishing rates of GDP growth in China and its immense negative effect on the entire global economy; the collapse in the commodity prices which has sent a chill down the spine of commodity investors — a huge drop of up to 40 percent - this sudden plunge in demand for commodities has set in to generate a macroeconomic bubble; the beginning of the end of low interest rates— the tightening of the monetary and fiscal policies to bring down inflation rates is the trend that has a long-term effect, said Dr. Gopinath.

The demographic trends of rising life expectancy with an increase in aging population in advanced economies has had a negative impact on the global economy with a steep decline in the ratio of working population to retired population, she explained.

While most emerging markets have been exposed to a negative shock due to the crashing commodity prices, India being a big commodity importer, is in a rather privileged position and will benefit from it, she added.

Emerging markets got a shock due to crash in commodity prices

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