那提西银行-亚洲-宏观经济-印度能超越中国吗？-20180205-10页_565kb

Flash Economics Summary: Could India Overtake China?

Core Content

This document explores the potential for India to overtake China in terms of GDP, considering demographic, economic, and structural factors. It highlights the challenges India faces despite its growing population and outlines the conditions necessary for GDP catch-up.

Main Question

Will India's GDP overtake China's in the future?

Key Factors for GDP Catch-Up

1. Demographics:

   • India's population is projected to overtake China's in 2022, and its working-age population is expected to surpass China's by 2028.
   • A larger working-age population can potentially drive economic growth.

2. Employability:

   • The employment rate among India's working-age population remains low compared to China's.
   • Educational attainment is a critical factor for employability. India lags behind China in this regard.

3. Labour Productivity:

   • Labour productivity in India is significantly lower than in China.
   • Productivity growth in India has been similar to China's since 2005, which suggests a need for acceleration.
   • Productivity depends on investment levels, capital modernisation, and public infrastructure.

4. Investment and Infrastructure:

   • India's investment levels are lower than China's, which hinders productivity growth.
   • China has more developed public infrastructure, particularly in transport and electricity, compared to India.
   • India's stock of industrial robots per 100 manufacturing jobs is very low, indicating weak capital modernisation.

5. Rural Exodus:

   • India's rural population is declining more slowly than China's, which affects the migration of skilled workers to urban areas and, consequently, the growth of the urban workforce and productivity.

6. Savings and External Deficit:

   • India has a low national savings rate, leading to a chronic external deficit.
   • This can result in currency crises and exchange-rate depreciation, which weaken economic growth.
   • Preventing these crises requires improving the savings rate.

Summary of Key Data

Population and Employment

• Population: India is expected to overtake China in 2022 (Chart 1A).
• Working-age population: India's working-age population is projected to overtake China's in 2028 (Chart 1B).
• Urban employment: India's urban employment is lower than China's (Chart 3).

Education and Literacy

• Educational attainment: India's population has lower levels of secondary and higher education compared to China.
• Illiteracy rate: India's illiteracy rate is significantly higher than China's (Table 1B).
• Youth education: India's youth education levels are lower, with fewer enrolled in educational institutions (Table 1C).

Productivity and Investment

• Labour productivity: India's productivity is much lower than China's (Chart 4).
• Investment levels: India's investment is lower than China's (Charts 8A and B).
• Industrial robots: India has a very low stock of industrial robots per 100 manufacturing jobs (Table 2).
• Public infrastructure: China has better transport infrastructure and higher electricity production per inhabitant (Table 3, Chart 9).

Economic Growth

• GDP growth: India's GDP growth has been slower than China's, despite similar productivity growth (Chart 6A).
• Per capita productivity: India's growth in per capita productivity has been limited (Chart 6B).

Conclusion

India has a demographic advantage over China, with a population expected to overtake it in 2022 and a working-age population expected to surpass it in 2028. However, for India to overtake China in GDP, it must improve the employability of its workforce and significantly increase labour productivity. This requires better education, higher investment, improved capital modernisation, and enhanced public infrastructure. Additionally, India must avoid recurring economic crises, which are largely driven by its low savings rate and chronic external deficit. Without addressing these structural and economic challenges, India's GDP growth may not be sufficient to match China's.

Key Challenges for India

• Low educational attainment and literacy rates
• Slow rural exodus
• Lower investment and capital modernisation
• Underdeveloped public infrastructure
• Recurring currency and external deficit crises

Risk Factors

• Economic instability due to low savings and external deficits
• Structural inefficiencies in education, infrastructure, and productivity
• Potential for currency depreciation and trade terms deterioration

Disclaimer

This document is intended for professional and qualified investors only. It is confidential and cannot be disclosed to third parties without prior written consent from Natixis. The views expressed are the personal opinions of the authors and do not constitute financial advice or a personalized investment recommendation. Natixis has not verified or independently analyzed the information provided.