Hopes and fears: India and the slouching dragon
The world’s factory is slowing down. This has prompted urgent questions about why the world’s second-largest economy is getting sluggish. As to the impact on India, there is both good and bad news.
Mint examines the pros and cons of the development: The $18 trillion Chinese economy is slowing down significantly. Its manufacturing purchasing managers’ index (PMI) declined to 49.1 in July compared to 50.5 in June. Any number below 50 means contraction.
China’s services PMI too fell sharply from 57.1 in May to 53.9 in June. In Q2 of this year, its economy grew by just 0.8% over the first quarter. According to IMF, China’s economy will expand by 5.2% in 2023 compared to a growth of 3% in 2022 and 8.4% in 2021.
The government has refrained from announcing any major stimulus so far and has been measured in its efforts to revive growth. The $18 trillion Chinese economy is slowing down significantly. Its manufacturing purchasing managers’ index (PMI) declined to 49.1 in July compared to 50.5 in June.
Any number below 50 means contraction. China’s services PMI too fell sharply from 57.1 in May to 53.9 in June. In Q2 of this year, its economy grew by just 0.8% over the first quarter.
According to IMF, China’s economy will expand by 5.2% in 2023 compared to a growth of 3% in 2022 and 8.4% in 2021. The government has refrained from announcing any major stimulus so far and has been measured in its efforts to revive growth. IMF says a 1 percentage point growth in China leads to a 0.3 percentage point growth in other countries.
A struggling Chinese economy will smother the nascent global recovery. According to IMF, global growth in 2023 will now be just 3% as against 3.5% in 2022. China and India are together expected to account for
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