India’s world-beating GDP growth numbers are riding the wave of an “unlocking” of efficiency due to contribution from sectors that weren’t easy to track in the past, said Nicolas Aguzin, chairman and chief executive officer, JPMorgan Asia Pacific.
“India’s growth over eight percent with relatively low inflation merits attention,” Aguzin said in an interaction with BloombergQuint. “Newer sectors that weren’t easy to track in the past are being considered. We don’t account for those efficiencies.”
He said that Asia’s third-largest economy tends to overestimate the impact of inflation and underestimate growth.
Key highlights from the conversation:
Impact Of U.S.-China Trade War
Trade activity, growth rates fairly strong despite all the noise around trade, exchange rates and rout of emerging markets.
Underlying structure of economies still seems to be solid.
Headlines around trade, Federal rates yet to have full impact.
Recession 2.0 On Cards?
Lot of indicators normal, but care needed on investor sentiment and appetite.
Need dialogue between U.S. and China over resetting current environment.
Intra-Asia Trade Activity
Surprisingly, there’s a lot of activity from Japanese corporations trying to leverage growth in the pan-Asian region.
North Korea softening its stand on nuclear bases will positively help in overcoming risks around Asia.
India’s Headline GDP Numbers
India overestimates the impact of inflation and underestimates growth.
Indian business and investor community tends to be conservative. In reality, numbers end up working out pretty well.
GDP numbers translating into meaningful investments: Walmart acquiring Flipkart and UPL buying Arysta are significant transactions.
Effects Of Trade Deficit, Rupee Slide
Factors played a role in investors turning more cautious.
Rupee devaluation caused by investors reallocating their portfolio away from domestic bonds.

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