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The rise of the BRICs, especially China and India, and the end of the American Century is a topic that has occupied policy makers, economists and investors throughout the past decade

American leadership and power is diversified across multiple areas, and while these areas are interrelated, a shift in performance across one or several does not necessarily indicate a general “American Decline” or the inevitability of the ascendancy of others

The TEST

The TEST is a test of broad development of the nations.  The TEST looks at the performance of countries from the perspective of Trade and Macro, Equity Markets, Society and Trends.  We have taken a limited number of indicators to form the cut of the TEST below.

 

Indian economic growth weakened slightly in March, largely due to the aftershock of last year’s rupee demonetisation scheme, but the country maintained its position as the world’s fastest growing major economy, expanding GDP by 7.0% y-o-y.  Moreover, the country’s outlook remains strong with the purchasing managers index for the month unchanged at 52.5, indicating significant future expansion and an increase of 1.7 over the previous month. In terms of trade India’s exports increased at the fastest pace ever in March, up 27% y-o-y to $ 29.2bn. However sharper increase in imports (up 45% y-o-y) widened the trade gap, leading to a trade deficit of $10.4bn.  Inflation, having sunk to its lowest level for at least five years in January, has crept up again and crossed 5.7% in March, exceeding the RBIs forecast of 4.5% for the first half of 2017 and increasing risk of rising interest rates in the second half of the year.

 

China’s economy got off to a strong start during the first quarter of 2017, with GDP expanding at a higher-than-expected 6.9% year-on-year, the quickest pace since early 2015.  Importantly, a total of 77.2% of the first-quarter GDP was driven by consumption, 12.6% higher than the 2016 level.  China’s official manufacturing purchasing managers’ index came in at 51.8 in March, above market expectation and the highest in nearly five years. In terms of trade, China’s imports (up 31.1% y-o-y) grew faster than exports (up 14.8% y-o-y) by a factor of two in the first quarter, resulting in a 35.7% reduction in the trade surplus. With China’s strong performance during the first quarter, market observers expect a greater emphasis on supply-side structural reform and a more decisive shift to fiscal and monetary tightening in the second half of the year.

 

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Note: Monthly macro-economic and market figures are typically released one to two weeks after the close of each month. Accordingly, the Monthly Indicators track the previous month’s data

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