The Global Growth Engines – Who is Next?
Participants in the panel discussion ‘The Global Growth Engines – Who is Next?’ tried to determine who would be the next world growth driver, will it be an industry or a specific country and, if a country, a developed or a developing one. This was discussed by speakers from India, the UK, China and Russia.
The first to express an opinion on the state of the world economy was the session’s moderator Chandrajit Banerjee, Director General of the Confederation of Indian Industry. He reminded those present that China was seeking a new balance: the country’s economic growth rate has dropped from 9% to 6%; moreover, the economy is suffering a drop in demand consumption. Brazil’s economic indicators have also fallen and South Africa is in recession. Yet the local economies are developing in Myanmar, India, Bangladesh, Indonesia and Vietnam. India, in the meantime, is thinking not so much about accelerating economic growth as about how to make this growth stable.
Johan Aurik, Managing Partner and Chairman of the Board, A.T. Kearney, stated outright that the USA is the driver of the global economy. He also shared the results of a study on how direct investments are leaving the developing countries for developed ones, in contrast to the situation 5–6 years ago, when the main mass of investments were going primarily into the BRICS countries. The reason for the change in investment flow recipients lies in the overall conservatism of investors and political risks.
Shiv Vikram Khemka, Vice-Chairman of the SUN Group, named India, China and the USA as the basis for development of the global economy. For India, in order to continue growing, it is important to develop human capital, to transform education and introduce digital technologies. In China, Mr. Khemka reminded those present, growth has slowed down as a result of transferring from an export-orientated economy to internal consumption. African countries are developing strongly but their main problem lies in management. The speaker also noted the shortage world leaders.
The independent economist Andy Xie stated that the global economy was in recession and that there was USD 60 trillion in public debts. Speaking about growth of the profit margin of GDP, debts will grow too. At the same time, productivity is falling everywhere. The whole world is at a crossroads: either it has to be accepted that global economic growth is slowing down or that investments are going into the wrong sectors. Mr. Xie added that there was a “collapse of leadership” and that central banks were “taking the easy way out”. All this, in aggregate, leads to social instability and tension.