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The Indian Growth Story – What’s Next?

Following a challenging year marked by the pandemic, India’s economy is expected to rebound in 2021, reclaiming its position as the world’s fastest growing major economy. Is the worst of India’s economic woes truly over or will there be roadblocks ahead? Find out in this episode with our experts Unmesh Kulkarni, Head of Markets, Investment & Wealth Management Solutions India and Mark Matthews, Head of Research Asia.

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Click on the player below to hear Unmesh and Mark’s conversation:

This was discussed in this episode:

  • Recovery on track: India is expected to be the world’s fastest growing major economy in 2021, with a GDP growth rate of 9% y/y, followed by 7% in the next year.
  • India’s fight against Covid-19: Uncertainties remain as the pandemic’s second wave sets the stage for another bumpy ride. However, authorities have become more vigilant this time around, and the vaccination drive is accelerating.
  • Structural reforms: While steps such as the Goods and Services Tax (GST), Demonetisation, the Real Estate Bill, and the Insolvency and Bankruptcy Code have not yielded immediate positive effects, they did help to cleanse the system, particularly in banking.
  • Growth catalysts: Cost rationalisation by companies, as well as an uptick in demand, fueled by higher government spending and lower interest rates, will give the economy a much-needed boost.
  • Strong earnings momentum: India is on the cusp of a longer term earnings recovery cycle. Earnings growth for corporate India is expected to be around 25% in FY22/23.
  • Information technology:  The IT sector has evolved from being a provider of talent and capabilities to assisting clients with critical business decisions and digital transformation.
  • Demographic dividend: India’s working-age population outnumbers its dependent population, and demographers predict that this will continue until 2055. This has far-reaching implications for the entire economy and market, with consumer goods companies clearly benefiting.
  • Indian equities in a sweet spot: We have upgraded our outlook on India from Neutral to Overweight. We believe that now is a good time to invest in this market.

Beyond Markets

Beyond Markets by Julius Baer is a series featuring conversations with experts to share recent market developments, key insights, and strategic inputs from around the globe. In each episode, we cut through the noise to offer practical advice and macro research on today’s shifting economic and market landscape.

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