Tuesday, December 1, 2015

India...What if?

The IMF recently stated that India's GDP expanded at 7.6% annual rate, growing faster than China for three straight quarters. India has overtaken Japan to be the worlds third largest economy in 2014. India's oil imports have surged, across all product categories, on low prices. India consumes 3.7MM barrels/day vs. China's 9.9MM barrels/day. However, India only produces 980,000 barrels/day vs. China's 4.5MM barrels/day

Wells Fargo has recently asked if India's GDP growth can be sustained and Wyatt Investment Research has recently asked if India will be Apple's next big market for smart phones.

During the previous decade China grew at about 10% while India grew at about 7%. However, in 2011 India was growing about 5% and China at 9.5%. By 2022, India is expected to have the worlds largest population.

What if the world's second and third largest economies grow at 7% (India) and 5% (China), with America growing at 2.5% over the next decade?

Compare this to the 2000-2010 period, where the American economy grew at about 3%, Japan, the second largest economy over that time, at 0%, while Germany who started this period as the third largest economy grew at sub 2%.

What will this do for commodity demand? One might suggest the negative sentiment and cuts in capital spending are not considering this possibility.

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