Becoming the Next China Won’t Blunt India’s 2023 Slowdown
The country will take several years to emerge as an alternative investment destination to the People’s Republic. That may not be soon enough for Narendra Modi, who faces reelection in 2024.
Sparks, but no flame.
Photographer: Dhiraj Singh/BloombergIt’s not immediately obvious that the global slowdown has also arrived in India: Investments in factories, roads, and other fixed assets are just shy of 35% of domestic output; they haven’t been this high in 10 years. Loan demand is growing so fast that deposits can’t keep up.
What’s driving India’s animal spirits amid a worldwide malaise? Some of it is a result of the economy reopening fully. Contact-based services like travel and hospitality came back sharply from their pandemic funk in the first half of the year, fueling optimism. The other oft-cited reason is what multinational corporations refer to as their “China+1” strategy.