The Leader and the Sign of the Times
The “Asian Century” has been a long-time dawning. First referenced in 1988 by Chinese leader Deng Xiaoping in a meeting with Indian prime minister Rajiv Gandhi, the intervening years have been tumultuous, witnessing the collapse of the Soviet Union, the US’s ascendance to hyperpower status, 9-11, the global financial crisis and the weakening of the global liberal world order. Through this period, however, Asia has risen (more or less steadily), gradually shifting the world’s centre of economic, political and potentially military gravity towards the East. Following the initial success of Japan and the Asian Tigers in the late 20th Century, China, and now India, have in the early 21st Century established themselves as the two fastest growing major economies in the world. Both countries, given their absolute scale and high growth rates, are today exerting an increasing amount of economic and geopolitical influence globally. More recently, a series of “newer” developing Asian economies like Indonesia, the Philippines, Vietnam and Thailand, are stepping into their predecessors’ footprints, delivering high economic growth and development rates. The continent accounts for more than 50% of the world’s population and is home to almost half of the world’s middle class. Moreover, the region is a global engine for consumption, the world’s investment and trade destination of choice, and is playing an increasingly important role in matters of global geopolitics and strategy. This month’s Sign of the Times focuses on global shifts that Asia’s growth promises to deliver during the 21st Century, keeping it simple, using a series of charts to demonstrate Asia’s growing weight in demographics, economics and global influence. Recognising, however, that while the long-term direction of growth appears to be fixed its trajectory is by no means a certainty; political strategies and rivalry not only within Asia but across continents can change these trajectories. Asia’s leaders will also need to focus their energies on solving a series of challenges and issues that have the potential to hold back the continent, and by extension the world.
Mr. Modi has secured a historic victory and has the chance to steer India in one of the most important phases, which has the potential to take hundreds of millions out of poverty and place India on the stage of world power. The ‘world’s largest exercise in democracy’, the Indian general election, concluded earlier this month with over 600m votes cast across seven phases of polling, spread over a period of five weeks, with more than 67% of India’s voting population turning out to express their preference. While Prime Minister Modi’s approval ratings have remained high over the last five years, the vast majority of opinion polls leading up to the general election seemed to indicate that the National Democratic Alliance (“NDA”), led by Mr. Modi’s Bhartiya Janata Party (“BJP”) would fall just short of a majority. However, the election results, announced on May 23rd, have proven this opinion polling data to be significantly off the mark. In a repeat of the 2014 general election result, the NDA was voted back into office with a significant majority, winning 352 out of a total 541 parliamentary seats in the Lok Sabha (India’s lower house of parliament), and with the BJP itself winning 303 seats directly, 21 more than in 2014.
India’s general election, the ‘world’s largest exercise in democracy’, is now underway with the first votes in a multi-phase process cast, with result to be announced on the 23rd of May. While opinion polls are projecting a wide range of outcomes, they currently favour a win by the incumbent BJP and its leader, Prime Minister Narendra Modi. If elected, Mr. Modi would be entrusted with the responsibility to lead India during one of the most critical periods in the country’s history. Following nearly two decades since India’s initial economic liberalisation, during which the country has seen strong, if volatile growth, India today is on the cusp of entering a new phase of growth that will take the country from US$3tn GDP this year to $5tn by the next general election in 2024.
India’s economy is in the midst of a rapid transition and is expected to overtake the US in size by 2030. With its GDP projected to cross US$3tn this year and US$8tn within the next decade, this transformation is extraordinary in terms of both its scale and its speed, with India’s growth now accelerating faster than any other major economy’s. Last month’s Sign examined the key underlying drivers of India’s transformation – its favourable demographics resulting in mass-scale urbanisation, technology adoption, consumerism and financial inclusion – all underpinned by India’s representative democracy and the resulting peaceful development of its society. In absolute terms, India’s growth is comparable only to China’s, which underwent a similar transition from 2006-2014 as its GDP expanded from US$2.7tn to US$8.1tn. China’s growth transformed its industries, its capital markets, its society and its politics and also drove seismic geostrategic shifts that resulted in global political and economic realignments. India’s rise over the next decade is likely to drive similar domestic transformations, ending extreme poverty, creating a massive urban middle class, and scaling domestic companies into global leaders. However, even though India’s rise is widely expected to be peaceful, its emergence as a real economic superpower will also likely disrupt the global economic and political status quo, shaping and re-shaping regional and global power alliances over the next decade and beyond.