Tom Friedman has got his challenger. The world is not flat, says the World Bank, in its latest World Development Report.
And don't you believe in the "death of distance", because distance from a centre of economic activity is a critical factor for both people and geographies.
Indeed the report, titled "Reshaping economic geography", argues that development is almost always concentrated -- and that is the way it is meant to be. So governments should be encouraging such concentration by facilitating migration and building the infrastructure that helps the process (like transport linkages).
It cites Tokyo-Yokohama's dominance of the Japanese economy and Cairo's in Egypt to make the point, though the Report does not seem to argue a 'cause and effect' sequence that goes beyond merely recording a fact that is obvious.
And yet, readers will immediately recall the success of China's coastal strategy, which was deliberately designed to encourage concentration of economic activity, and worked--one of the thoughts behind India's official support to special economic zones.
The report challenges some long-established notions, especially in India where the spatial distribution of industrial activity has been part of official policy for more than half a century.
There is the effort to "provide urban facilities in rural areas" (or Pura); there is Narendra Modi with his notion of a "rurban" (rural-urban) model for Gujarat; and variations on these themes.
The report does not necessarily disagree with such initiatives, arguing that policies should encourage inclusive growth and try to equalise standards of living across geographies. But that would seem counter-intuitive when it argues at the same time that uneven development is an inescapable fact of life.
The report is likely to provoke debate, and its authors say that it is meant to be a starting point for discussion, not a final argument.
Certainly, India has seen that the cluster logic works for many industries (Tamil Nadu as an auto hub, Bangalore as an IT-driven city, and one-industry towns that dot the country like Moradabad and Tirupur).
More importantly, the country needs to figure out how to make its cities work better (the correct pricing of land and the development of mass transport are crucial, and on both points realisation is only slowly dawning on politicians and policymakers), how to finance urban development in a self-sustaining manner, and how to make the divisions between rich and poor more porous within a city so that habitations do not become completely stratified.
But there will also be debate about the changing nature of the city (de-industrialised, and service-driven), the drift to suburbia, the move to off-centre, campus-style office complexes, and what each of these means for concentration.
As with all World Development Reports, there is a set of tables that provide inter-country comparisons on some basic parameters.
India now figures about two-thirds of the way down the list of about 130 countries when it comes to per capita income (it used to be 16th from the bottom when the WDR first came out three decades ago, but there were fewer countries then), and just about scrapes into the category of 'lower-middle income' countries with per capita income of $950 (for 2007).
In total economic size, it is the smallest among the Bric economies, being fractionally behind Russia and Brazil. It therefore ranks 12th as an economy, 25th as an exporter, 20th as a recipient of foreign investment, and gets one dollar per capita as official aid (lower-middle income country average: $9). It has the fifth highest external debt, but that debt is just 15 per cent of GDP (low- and middle-income country average: 75 per cent).
And the maximum numbers of out-migrants in the world are from Mexico, China and India, followed in short order by Iran, Pakistan and Indonesia. On most millennium development goals, India is better than the low-income country average, but worse than the typical lower-middle income country figure.
And in case anyone is still in the mood for chest-thumping, India's per capita income is about one-eighth of the world average.
Source
Showing posts with label BRIC. Show all posts
Showing posts with label BRIC. Show all posts
Monday, March 16, 2009
Thursday, February 12, 2009
The worst is yet to come
Let's begin with some good news. Large companies with proven track records haven't disappointed the market. In fact, the third-quarter results of Reliance Industries, Infosys, ITC and ICICI Bank have been either along expected lines, or better than the Street's estimates. But that's not true for the rest of India Inc. The earnings of most mid- and small-cap companies have deteriorated alarmingly.
The net sales of 450 firms, which declared Q3 results till 23 January, have grown at a healthy 19.34% compared with the same quarter in the previous fiscal. But their net profits have fallen by 22.15% during the same period. The steep drop in profits is worrying because these companies registered a robust 40.29% growth in profits in the third quarter of 2007-8. The real problem is with the small and mid-sized firms, whose net profits in Q3 2008-9 have fallen by a massive 39%.
"Most large corporates haven't really disappointed us. The stress is more pronounced in case of midcap firms, where some of the results were worse than the already toneddown expectations," says Gaurav Dua, head of research, Sharekhan.
So, should you invest across stocks as the indices fall to attractive levels? Or should you look only at blue chips? To answer these questions, one needs to figure out what is likely to happen in the next few quarters.
The third quarter of 2008-9 was expected to be one of the weakest in recent years. By November 2008, analysts had scaled down their expectations and the markets had discounted the prices of most stocks. Profit margins were under pressure during Q2 due to inventory losses as most companies were saddled with raw materials purchased at the peak of the commodity cycle in July-August 2008.
Sadly, there may not be any respite in Q4. Reasons Dua: "Though some of the companies will begin to show relief on margins due to lower raw material costs, the demand environment will remain muted." This will happen because of several factors. Fragile sentiments, cash crunch and falling exports will take their toll on the Indian companies. As firms curtail investments, cut costs and reduce production, it will lead to a slump in economic activity.
"Industrial growth will slow down to 2.5% this year, against 9% in the previous fiscal. Given that the business confidence will remain low, the slowdown will spill over to 2009-10," predicts Anubhuti Sahay, associate economist at the Standard Chartered Bank.
In such a scenario, even sectors such as IT and banking, which were insulated from the drop in demand so far, can face problems. Commenting on the Q3 results, Wipro chairman Azim Premji said, "We are living in tough times; the macro-economic challenges are impacting businesses across segments." Both Infosys and Wipro have cut their annual guidance.
"The revenue visibility across companies appears to be, at best, limited to a quarter," says Abhiram Eleswarapu, analyst at BNP Paribas. Therefore, in the case of IT stocks, existing and potential investors need to wait and watch before taking investment decisions.
The same is true for banks, which posted an amazing profit growth of over 30% in Q3. But this is not likely to sustain. Moderate credit growth, lower interest rates on government bonds and rising NPAs will put pressure on earnings. "We foresee a slowdown in banks' earnings over the next few quarters as the G-Sec gains become muted," says Sonam Udasi, vice-president of research at Brics Securities.
Analysts say that despite low interest rates and the government's intention to trigger a demand-led growth cycle, the situation might improve only in the second half of 2009-10. "Once the impact of the interest rate cycle is passed on and firms begin to reduce their working capital requirement, the bottom line growth is expected to improve," says Sankaran Naren, CIO, equity, ICICI Prudential AMC.
Among sectors, while realty and commodities might slip, FMCG and pharma may continue with their growth story. Cash-rich companies with low or negligible debt are likely to outperform. "Investors should avoid aggressive or leveraged sectors, and focus on companies with excellent financial and operational management," concludes Naren.
Source
The net sales of 450 firms, which declared Q3 results till 23 January, have grown at a healthy 19.34% compared with the same quarter in the previous fiscal. But their net profits have fallen by 22.15% during the same period. The steep drop in profits is worrying because these companies registered a robust 40.29% growth in profits in the third quarter of 2007-8. The real problem is with the small and mid-sized firms, whose net profits in Q3 2008-9 have fallen by a massive 39%.
"Most large corporates haven't really disappointed us. The stress is more pronounced in case of midcap firms, where some of the results were worse than the already toneddown expectations," says Gaurav Dua, head of research, Sharekhan.
So, should you invest across stocks as the indices fall to attractive levels? Or should you look only at blue chips? To answer these questions, one needs to figure out what is likely to happen in the next few quarters.
The third quarter of 2008-9 was expected to be one of the weakest in recent years. By November 2008, analysts had scaled down their expectations and the markets had discounted the prices of most stocks. Profit margins were under pressure during Q2 due to inventory losses as most companies were saddled with raw materials purchased at the peak of the commodity cycle in July-August 2008.
Sadly, there may not be any respite in Q4. Reasons Dua: "Though some of the companies will begin to show relief on margins due to lower raw material costs, the demand environment will remain muted." This will happen because of several factors. Fragile sentiments, cash crunch and falling exports will take their toll on the Indian companies. As firms curtail investments, cut costs and reduce production, it will lead to a slump in economic activity.
"Industrial growth will slow down to 2.5% this year, against 9% in the previous fiscal. Given that the business confidence will remain low, the slowdown will spill over to 2009-10," predicts Anubhuti Sahay, associate economist at the Standard Chartered Bank.
In such a scenario, even sectors such as IT and banking, which were insulated from the drop in demand so far, can face problems. Commenting on the Q3 results, Wipro chairman Azim Premji said, "We are living in tough times; the macro-economic challenges are impacting businesses across segments." Both Infosys and Wipro have cut their annual guidance.
"The revenue visibility across companies appears to be, at best, limited to a quarter," says Abhiram Eleswarapu, analyst at BNP Paribas. Therefore, in the case of IT stocks, existing and potential investors need to wait and watch before taking investment decisions.
The same is true for banks, which posted an amazing profit growth of over 30% in Q3. But this is not likely to sustain. Moderate credit growth, lower interest rates on government bonds and rising NPAs will put pressure on earnings. "We foresee a slowdown in banks' earnings over the next few quarters as the G-Sec gains become muted," says Sonam Udasi, vice-president of research at Brics Securities.
Analysts say that despite low interest rates and the government's intention to trigger a demand-led growth cycle, the situation might improve only in the second half of 2009-10. "Once the impact of the interest rate cycle is passed on and firms begin to reduce their working capital requirement, the bottom line growth is expected to improve," says Sankaran Naren, CIO, equity, ICICI Prudential AMC.
Among sectors, while realty and commodities might slip, FMCG and pharma may continue with their growth story. Cash-rich companies with low or negligible debt are likely to outperform. "Investors should avoid aggressive or leveraged sectors, and focus on companies with excellent financial and operational management," concludes Naren.
Source
Wednesday, December 24, 2008
BRICs to account for 40% of world growth by '20: E&Y
BRIC nations -- Brazil, Russia, India and China -- are likely to contribute 40 per cent of global economic growth in the next 10 years due to a 'tectonic shift' in the distribution of global capital over the next decade, global consultancy firm Ernst & Young said.
"Companies and governments in the developed world have to face up to the reality that there will be a further shift in the economic balance of power in the years ahead," Mark Otty, area managing partner (Europe, West Asia, India and Africa) at Ernst & Young said.
In the latest research note titled 'For Richer, For Poorer Global Patterns of Wealth', Ernst & Young said emerging economies have seen their share of global output and wealth rise significantly over the last few years, driven by faster growth, rising income, high savings ratios, strong investment and export.
In the next decade, the BRIC countries are likely to contribute 40 per cent of global growth, while the US would account for around 14 per cent.
China is set to become the biggest economy in the world in public-private partnership terms by 2019 and by 2020 the BRIC countries would account for almost a third of global GDP -- of which China will contribute 18 per cent.
E&Y projects that the BRICs would account for 65 per cent of global basic metals output by 2020 and here also China would account for the lion's share of growth.
According to the report, around 77 per cent of world reserves, totalling almost $7 trillion, are held by emerging markets.
Besides, cross-border private investment by emerging economies has been increasing as well.
Outward flows of foreign direct investment from emerging economies rose from $20 billion in 2000 to $184 billion in 2007.
"Whilst it is not inevitable that the global growth dynamics of the past decade will continue indefinitely, the strong domestic momentum in the large emerging economies and benefits from improved macro and micro economic policies will mean that the next decade sees an impressive rate of expansion," Adrian Cooper, senior economic advisor to the Ernst & Young ITEM Club, said.
The factors that helped the emerging market economies sustain the growth over the past year and served to cushion the impact of the crisis in the developed economies include limited exposure to problematic asset classes such as sub-prime US mortgages.
Besides, economic policies particularly fiscal settings have remained relatively sound in recent years.
Notwithstanding the global economic turmoil, it has been forecast that emerging economies will continue to grow faster than developed countries over the next decade, which will underpin a further shift in the economic balance of power in the years ahead, though not as marked as in the past 10 years.
Otty says strong economic performance by emerging economies is a major positive for the global economy, even developed countries, offering new markets and growth opportunities.
"Companies and governments in the developed world have to face up to the reality that there will be a further shift in the economic balance of power in the years ahead," Mark Otty, area managing partner (Europe, West Asia, India and Africa) at Ernst & Young said.
In the latest research note titled 'For Richer, For Poorer Global Patterns of Wealth', Ernst & Young said emerging economies have seen their share of global output and wealth rise significantly over the last few years, driven by faster growth, rising income, high savings ratios, strong investment and export.
In the next decade, the BRIC countries are likely to contribute 40 per cent of global growth, while the US would account for around 14 per cent.
China is set to become the biggest economy in the world in public-private partnership terms by 2019 and by 2020 the BRIC countries would account for almost a third of global GDP -- of which China will contribute 18 per cent.
E&Y projects that the BRICs would account for 65 per cent of global basic metals output by 2020 and here also China would account for the lion's share of growth.
According to the report, around 77 per cent of world reserves, totalling almost $7 trillion, are held by emerging markets.
Besides, cross-border private investment by emerging economies has been increasing as well.
Outward flows of foreign direct investment from emerging economies rose from $20 billion in 2000 to $184 billion in 2007.
"Whilst it is not inevitable that the global growth dynamics of the past decade will continue indefinitely, the strong domestic momentum in the large emerging economies and benefits from improved macro and micro economic policies will mean that the next decade sees an impressive rate of expansion," Adrian Cooper, senior economic advisor to the Ernst & Young ITEM Club, said.
The factors that helped the emerging market economies sustain the growth over the past year and served to cushion the impact of the crisis in the developed economies include limited exposure to problematic asset classes such as sub-prime US mortgages.
Besides, economic policies particularly fiscal settings have remained relatively sound in recent years.
Notwithstanding the global economic turmoil, it has been forecast that emerging economies will continue to grow faster than developed countries over the next decade, which will underpin a further shift in the economic balance of power in the years ahead, though not as marked as in the past 10 years.
Otty says strong economic performance by emerging economies is a major positive for the global economy, even developed countries, offering new markets and growth opportunities.
Tuesday, November 18, 2008
G20 leaders agree to PM's plans; reject protectionism
In what indicates India's growing clout on the world stage, the leaders of the Group of Twenty agreed to act urgently upon each of the three major issues raised by Indian Prime Minister Manmohan Singh, namely:
the need for greater inclusivity for emerging markets in the international financial system,
need to ensure that the growth prospects of the developing countries are not hampered, and
the need to avoid protectionist tendencies
The response of the world's top leaders to the global financial storm -- the most severe since the Great Depression -- also points towards how India has managed to turn a crisis into an opportunity to smartly push through its agenda of accruing to itself a larger say in the world's economic matters.
the need for greater inclusivity for emerging markets in the international financial system,
need to ensure that the growth prospects of the developing countries are not hampered, and
the need to avoid protectionist tendencies
The response of the world's top leaders to the global financial storm -- the most severe since the Great Depression -- also points towards how India has managed to turn a crisis into an opportunity to smartly push through its agenda of accruing to itself a larger say in the world's economic matters.
The G20 leaders said in a draft communique on the Summit on Financial Markets and World Economy that they were determined to enhance co-operation and work together to restore global growth and achieve the much-needed reforms in the world's financial systems.
The G20 leaders said that rejection of protectionism and turning inward in such uncertain times was of critical importance, and agreed to refrain from raising new barriers to investment or trade in goods and services, or to impose new export restrictions, or implement inconsistent measures to stimulate exports. They would also striveto work on modalities that lead to a successful conclusion to the WTO's Doha Development Agenda.
Stating that they were mindful of the impact of the current crisis on developing countries, the G20 leaders reaffirmed the importance of Millennium Development Goals, the need to address critical challenges like energy security and climate change, food security, rule of law, and the battle against terrorism, poverty and disease.
The G20 leaders said that rejection of protectionism and turning inward in such uncertain times was of critical importance, and agreed to refrain from raising new barriers to investment or trade in goods and services, or to impose new export restrictions, or implement inconsistent measures to stimulate exports. They would also striveto work on modalities that lead to a successful conclusion to the WTO's Doha Development Agenda.
Stating that they were mindful of the impact of the current crisis on developing countries, the G20 leaders reaffirmed the importance of Millennium Development Goals, the need to address critical challenges like energy security and climate change, food security, rule of law, and the battle against terrorism, poverty and disease.
The G20 also agreed, as suggested by India, to comprehensively reform international financial institutions so that they reflect changing economic weights in the world economy and give greater voice to emerging and developing markets. The leaders said that IMF and other international organisations should provide capacity-building programmes for emerging markets
Agreeing upon the need for a broader policy response, based on closer macroeconomic cooperation, to restore growth, avoid negative spillovers and support emerging market economies and developing countries, the G20 put forth a 6-point agenda to face short- and long-term challenges. The G20 agreed to:
Help emerging and developing markets gain access to finance in the current difficult financial conditions, including through liquidity facilities and programme support.
Use fiscal measures to stimulate domestic demand to rapid effect while maintaining policy framework conducive to fiscal sustainability.
Recognise the importance of monetary policy support as deemed appropriate to domestic conditions.
Continue the vigorous efforts and whatever further actions are necessary to stabilise the financial system.
Encourage the World Bank and other multilateral development banks to use their full capacity in support of their development agenda, and the introduction of new facilities in the areas of infrastructure and trade finance.
Ensure that the International Monetary Fund, the World Bank and other MDBs have sufficient resources to continue playing their role in overcoming the financial crisis.
Apart from this plan, the G20 also agreed to implement reforms that will strengthen financial markets and regulatory regimes to avoid future crises. The G20 pledged to:
Strengthen financial market transparency by enhancing required disclosure on complex financial products and ensuring complete and accurate disclosure by firms of their financial conditions.
Incentives should be aligned to avoid excessive risk-taking.
Towards this end:
The key global accounting standards bodies should work to enhance guidance for valuation of securities
Accounting standards setters should address weaknesses in accounting and disclosure standards for off-balance sheet vehicles.
Regulators should enhance the required disclosure of complex financial instruments by firms to market participants.
The governance of international accounting standards body should be enhanced to promote financial stability.
Private sector bodies that have already developed best practices for private pools of capital and/or hedge funds should bring forward proposals for a set of unified best practices.
Strengthen regulatory regimes, prudential oversight and risk management, and ensure that all financial markets products and participants are regulated or subject to oversight as appropriate to their circumstances.
Strong oversight of credit rating agencies will be exercised consistent with agreed international code of conduct.
The IMF, expanded FSF, and other regulators should develop recommendations to mitigate pro-cyclicality, including the review of how valuation and leverage, bank capital, executive compensation, and provisioning practices may exacerbate cyclical trends.
Protect the integrity of the world's financial markets by bolstering investor and consumer protection, avoiding conflicts of interest, preventing illegal market manipulation, fraudulent activities, and protecting against illicit finance risks arising from non-cooperative jurisdictions.
Formulate regulations at the national and regional levels and enhance coordination and cooperation among nations across all segments of financial markets. The FSF should expand to a broader membership of emerging economies.
The IMF and the FSF should strengthen collaboration to better integrate regulatory and supervisory responses into the macro-prudential policy framework and conduct early warning exercises.
The IMF should draw lessons form the current crisis.
The adequacy of IMF's resources should be reviewed and the World Bank and other MDBs should be ready to increase them when necessary.
Advance reform of the Bretton Woods Institutions (World Bank, IMF) so that they can more adequately reflect changing economic weights in the world economy in order to increase their legitimacy and effectiveness.
Expand the Financial Stability Forum and allow broader membership of emerging economies. The IMF, along with the expanded FSF and other bodes, should work to better identify vulnerabilities, anticipate potential stresses and act swiftly to play a key role in crisis response.
The G20 also set a deadline to completing high priority actions prior to March 31, 2009 The G20 decided to meet again by April 30, 2009 to review implementation of the principles and decisions agreed at the Washington Summit.
Help emerging and developing markets gain access to finance in the current difficult financial conditions, including through liquidity facilities and programme support.
Use fiscal measures to stimulate domestic demand to rapid effect while maintaining policy framework conducive to fiscal sustainability.
Recognise the importance of monetary policy support as deemed appropriate to domestic conditions.
Continue the vigorous efforts and whatever further actions are necessary to stabilise the financial system.
Encourage the World Bank and other multilateral development banks to use their full capacity in support of their development agenda, and the introduction of new facilities in the areas of infrastructure and trade finance.
Ensure that the International Monetary Fund, the World Bank and other MDBs have sufficient resources to continue playing their role in overcoming the financial crisis.
Apart from this plan, the G20 also agreed to implement reforms that will strengthen financial markets and regulatory regimes to avoid future crises. The G20 pledged to:
Strengthen financial market transparency by enhancing required disclosure on complex financial products and ensuring complete and accurate disclosure by firms of their financial conditions.
Incentives should be aligned to avoid excessive risk-taking.
Towards this end:
The key global accounting standards bodies should work to enhance guidance for valuation of securities
Accounting standards setters should address weaknesses in accounting and disclosure standards for off-balance sheet vehicles.
Regulators should enhance the required disclosure of complex financial instruments by firms to market participants.
The governance of international accounting standards body should be enhanced to promote financial stability.
Private sector bodies that have already developed best practices for private pools of capital and/or hedge funds should bring forward proposals for a set of unified best practices.
Strengthen regulatory regimes, prudential oversight and risk management, and ensure that all financial markets products and participants are regulated or subject to oversight as appropriate to their circumstances.
Strong oversight of credit rating agencies will be exercised consistent with agreed international code of conduct.
The IMF, expanded FSF, and other regulators should develop recommendations to mitigate pro-cyclicality, including the review of how valuation and leverage, bank capital, executive compensation, and provisioning practices may exacerbate cyclical trends.
Protect the integrity of the world's financial markets by bolstering investor and consumer protection, avoiding conflicts of interest, preventing illegal market manipulation, fraudulent activities, and protecting against illicit finance risks arising from non-cooperative jurisdictions.
Formulate regulations at the national and regional levels and enhance coordination and cooperation among nations across all segments of financial markets. The FSF should expand to a broader membership of emerging economies.
The IMF and the FSF should strengthen collaboration to better integrate regulatory and supervisory responses into the macro-prudential policy framework and conduct early warning exercises.
The IMF should draw lessons form the current crisis.
The adequacy of IMF's resources should be reviewed and the World Bank and other MDBs should be ready to increase them when necessary.
Advance reform of the Bretton Woods Institutions (World Bank, IMF) so that they can more adequately reflect changing economic weights in the world economy in order to increase their legitimacy and effectiveness.
Expand the Financial Stability Forum and allow broader membership of emerging economies. The IMF, along with the expanded FSF and other bodes, should work to better identify vulnerabilities, anticipate potential stresses and act swiftly to play a key role in crisis response.
The G20 also set a deadline to completing high priority actions prior to March 31, 2009 The G20 decided to meet again by April 30, 2009 to review implementation of the principles and decisions agreed at the Washington Summit.
Monday, November 17, 2008
'Balance of economic power is shifting to emerging nations'-PM
The balance of economic power is now increasingly shifting in favour of the emerging economies, said Prime Minister Manmohan Singh on Saturday on his way back to India from the Summit on Financial Markets and World Economy called for G20 leaders in Washington by President George Bush.
He described the meeting held to find ways to tackle the financial hurricane that has ravaged the global economy as "a very successful affair."
He described the meeting held to find ways to tackle the financial hurricane that has ravaged the global economy as "a very successful affair."
"We were previously also, for the last couple of years, being invited to the G8 meetings, but consultations were mere formalities. Our views were not really taken into account, while they were formulating their viewpoints. This is for the first time that a genuine dialogue was held between the major developed and major emerging countries. I believe this is one reflection of the shifting balance of economic power and the Western world, at long last has got to realise this reality. That is a positive gain."
He said his apprehensions -- about the meeting not being well prepared, the possibility of dissension between the Americans and the Europeans, and the likelihood of emerging countries' point of view may not receiving required attention -- had been totally laid to rest.
"There was no attempt to score partisan points. It was recognised that the world was faced with a major financial crisis and it was now threatening to spill over to the real economy of both the developed and developing countries," said the prime minister.
He said that the world leaders recognised that although developing countries had done nothing to contribute to the current financial crisis, they were probably the worst sufferers, with dwindling exports, slowdown in flow of capital and direct investment and foreign capital flying out.
"All the developing countries were united in making this demand that this crisis should not become an occasion to divert the world's attention from the development dimension of the human condition. There our point of view was that in a situation where private capital was not available for various reasons, there was need to mount a considerable fiscal stimulus to make good for the deficiency in private demand," said the prime minister.
He said that there was complete agreement that a considerable fiscal stimulation was called for. In the present time, inflation was much less of a danger, and deflation was the real concern, which the world had to grapple with.
Therefore those countries which have the maneuverability should use fiscal stimulus to boost demand.
It was also agreed that as far as the developing countries are concerned, infrastructure investment and its protection will be a major contributory factor to sustaining growth rates and therefore the international financial institutions, both the World Bank and IMF and the regional development banks must come out with facilities to increase their assistance to these countries, he added.
He also said that there was unanimity at the meeting that international financial institutions must be provided with adequate resources to meet the challenge of the crisis as far as developing countries are concerned.
Singh also said that the leaders also agreed on a work programme -- short-term, medium-term, and long-term. It agreed to meet again in April, to take stock of the situation.
The tackling and containment of the crisis will take time, but work is in progress. Improvement of standards, reform of the supervision and management systems, and governance structure, particularly that of the international financial institutions, and giving greater weightage to the emerging countrieswere some of the concerns that were taken on board.
He said that President Bush, in his closing remarks did touch on the subject of his relationship with the incoming administration. He said that the coming administration has been fully briefed about what was happening and its outcome. Stating that he was, therefore, hopeful that there will be broad convergence of views, the prime minister added that, "..but I am not an expert on American politics to predict what will be the shape of things when the new administration takes over."
The prime minister, however, cautioned that the situation was so serious that one cannot wait until January 20 (when Barack Obama will take over as the 44th President of the US), because the financial crisis is now spilling over to the real economy and for the world to say that it will do nothing until then 'would not be a very responsible act so'.
So despite all the uncertainties associated with the change of administration, Singh, said it was clear from the Summit meetings that the world leaders are truely concerned and are committed to find practical, pragmatic solutions to this problem.
In a media briefing that was held on board his special aircraft the prime minister took a few questions from the travelling media. Excerpts:
You had predicted that growth rate would be impacted...
Well, I don't take credit, but Finance Minister, Mr (P) Chidambaram, and I had anticipated that there is likely to be a global slowdown this year. Therefore, in preparing for the Budget for the current year, we budgeted for a very substantial amount of deficit, precisely to take care of the slack that may emerge.
So as far as our economy is concerned, I think, our fiscal stimulus is already on. The fact that we have given record prices to the producers of wheat and rice; that Rs 71,000 crores (Rs 710 billion) of loans have been written off, we have set in motion a very extensive programme for social service and infrastructure expansion.
So as far as India is concerned, fiscal stimulus is by and large already in place. We have already taken steps to provide more liquidity, and ready to provide even more, if required.
Is there anything else which is being given apart from what is already provided for? What is the next fiscal stimulus package that can be expected?
Well, I think this is not a once and for all process. We are keeping the situation under review on a day-to-day basis. The Reserve Bank of India [Get Quote] is at it, the finance ministry is at it... I'm heading a committee with the finance minister and Commerce Minister (Kamal Nath). So whatever is needed to keep the economy on an even keel will be done.
Fortunately inflation is now becoming less of a problem and if you look at the inflation from a different angle, it is de-seasonlized data.
The situation is turning out to be much better on the inflation front than is evident from this year-on-year figures. That will give us greater maneuverability to deal with the economic situation.
Should we be more proactive in cutting interest rates?
I think as far as interest rates are concerned, that is the preserve of the Reserve Bank of India. It would not be proper for me to comment on this but as I said this is an evolving situation, if inflation rate comes down, if we feel confident that inflation will not be a problem, there is scope for maneuverability, both in more aggressive use of monetary policy and more aggressive use of fiscal policy.
Is the global crisis a failure of capitalism as an ideology or a mistake
Well, financial capital certainly has shown weaknesses. There has been lack of supervision, there has been too much faith that self-interest will make people behave in an enlightened manner. So these are weaknesses of the system, the financial system regulation has been ineffective. But I don't believe that these are inherent in the system.
The Left is saying that they have saved the nation by not allowing the pension bill. Your comment please.
But what has that got to do with this. Even if the pension bill was not there, I don't see the world situation would have been different. We are a small player. Global meltdown is not a crisis which is the result of wrong policies of the Government of India. It is a crisis made outside India. We are the victims of it, not the cause.
Oil prices have come down. Do you intend to respond?
Well we will look at all the options. We have still a considerable deficit on the oil account. This is as I said an evolving situation.
Was there consensus on your point on protectionism?
Yes there is a general agreement that protectionism would be a wrong response to the present situation. It would only accentuate the crisis. Such 'beggar thy neighbor policies' have never worked in the past. They only slowdown and lead to decline of economic activity all around. There is in the communiqu�, I think, a reaffirmation that all countries will resist a recourse to protectionist tendencies.
Would there be an impact on the Doha round of WTO talks?
Yes. A part of the same communiqu� states that this gives urgency to the task of completing the Doha round as early as possible.
Your comments on the capital account convertibility and banking review as stated in your speech at RBI in 2006
When I went to the Reserve Bank some two years ago, I had said that the whole issue of capital account convertibility needs to be relooked at. There was a Tarapore Committee Report, so I suggested that maybe Tarapore should be asked to relook and revisit it. I did not pronounce anything about if we were going to have capital account convertibility or when. It was a suggestion and Reserve Bank followed it up. And that report is a public document.
What about banking sector review?
This is a question about FDI (foreign direct investment) in banking- (indicates to FM)...
Finance minister: The notification was made towards the end of the NDA Government in January-February 2004. All that we said was that since the notification has been made, we will allow foreign capital in private-sector banks. If any Indian investor wants to buy shares in a private-sector bank, he is subject to a voting cap. As long as there is a voting cap new capital will not come into a private-sector bank. We plan to remove the voting cap.
That amendment (reviewing the voting cap) had been introduced in the parliament. Whether it is foreign capital or Indian capital into a private-sector bank, as long as this cap is there no capital is going to come.
Is the government satisfied with the way it has handled the situation (financial crisis)? Will the people of this country vote the government back?
Well, I think we have done reasonably well and I sincerely hope that the people of India would repose their confidence in us.
When would this crisis get over?
I am not an astrologer. I think there are apprehensions that we haven't seen the worst of the crisis. There are conflicting viewpoints. Our efforts must be to contain and rollback the crisis. But how long will it take, I am afraid, I cannot pronounce with any sense of authority.
Are there any apprehensions in India about Obama regime?
No, no. From whatever feedback I have, I think we have no reason to be apprehensive about the change of regime in the United States. There is general recognition in the US regarding the role that India can play, ...India should play. There is considerable appreiciation of the way Indian economy is managed. And more recently, also Obama did send Madeleine Albright and former Congressman Leach to interact with us. They have given us all the positive indication, so there is no reason to have any doubts about the intentions of the Obama administration towards India.
Your response to the approaching elections and the crisis...
Well, as I said the crisis is not our making. What I would like is for the people of India to judge us by the response of our government to this crisis. We acted in time, and while the rest of the world is in doom and gloom, we will still maintain a growth rate of 7.5 per cent. Growth with stability, more socially inclusive growth is a reality and will remain a reality despite the onslaught of the adverse turn in our external environment.
Will the crisis postpone or hasten elections?
It has no bearing on the elections. Elections will be held on schedule.
What has been to IMF's role, as far as the crisis is concerned?
It has been endorsed that more resources should be provided to the International Monetary Fund and the World Bank. At the meeting itself, the Japanese government announced a loan of hundred billion dollars to the IMF. So on the whole I think, the climate in the developed world is to recognise that international institutions need extra resources if they are to come to the rescue of the emerging countries and other developing countries.
He said his apprehensions -- about the meeting not being well prepared, the possibility of dissension between the Americans and the Europeans, and the likelihood of emerging countries' point of view may not receiving required attention -- had been totally laid to rest.
"There was no attempt to score partisan points. It was recognised that the world was faced with a major financial crisis and it was now threatening to spill over to the real economy of both the developed and developing countries," said the prime minister.
He said that the world leaders recognised that although developing countries had done nothing to contribute to the current financial crisis, they were probably the worst sufferers, with dwindling exports, slowdown in flow of capital and direct investment and foreign capital flying out.
"All the developing countries were united in making this demand that this crisis should not become an occasion to divert the world's attention from the development dimension of the human condition. There our point of view was that in a situation where private capital was not available for various reasons, there was need to mount a considerable fiscal stimulus to make good for the deficiency in private demand," said the prime minister.
He said that there was complete agreement that a considerable fiscal stimulation was called for. In the present time, inflation was much less of a danger, and deflation was the real concern, which the world had to grapple with.
Therefore those countries which have the maneuverability should use fiscal stimulus to boost demand.
It was also agreed that as far as the developing countries are concerned, infrastructure investment and its protection will be a major contributory factor to sustaining growth rates and therefore the international financial institutions, both the World Bank and IMF and the regional development banks must come out with facilities to increase their assistance to these countries, he added.
He also said that there was unanimity at the meeting that international financial institutions must be provided with adequate resources to meet the challenge of the crisis as far as developing countries are concerned.
Singh also said that the leaders also agreed on a work programme -- short-term, medium-term, and long-term. It agreed to meet again in April, to take stock of the situation.
The tackling and containment of the crisis will take time, but work is in progress. Improvement of standards, reform of the supervision and management systems, and governance structure, particularly that of the international financial institutions, and giving greater weightage to the emerging countrieswere some of the concerns that were taken on board.
He said that President Bush, in his closing remarks did touch on the subject of his relationship with the incoming administration. He said that the coming administration has been fully briefed about what was happening and its outcome. Stating that he was, therefore, hopeful that there will be broad convergence of views, the prime minister added that, "..but I am not an expert on American politics to predict what will be the shape of things when the new administration takes over."
The prime minister, however, cautioned that the situation was so serious that one cannot wait until January 20 (when Barack Obama will take over as the 44th President of the US), because the financial crisis is now spilling over to the real economy and for the world to say that it will do nothing until then 'would not be a very responsible act so'.
So despite all the uncertainties associated with the change of administration, Singh, said it was clear from the Summit meetings that the world leaders are truely concerned and are committed to find practical, pragmatic solutions to this problem.
In a media briefing that was held on board his special aircraft the prime minister took a few questions from the travelling media. Excerpts:
You had predicted that growth rate would be impacted...
Well, I don't take credit, but Finance Minister, Mr (P) Chidambaram, and I had anticipated that there is likely to be a global slowdown this year. Therefore, in preparing for the Budget for the current year, we budgeted for a very substantial amount of deficit, precisely to take care of the slack that may emerge.
So as far as our economy is concerned, I think, our fiscal stimulus is already on. The fact that we have given record prices to the producers of wheat and rice; that Rs 71,000 crores (Rs 710 billion) of loans have been written off, we have set in motion a very extensive programme for social service and infrastructure expansion.
So as far as India is concerned, fiscal stimulus is by and large already in place. We have already taken steps to provide more liquidity, and ready to provide even more, if required.
Is there anything else which is being given apart from what is already provided for? What is the next fiscal stimulus package that can be expected?
Well, I think this is not a once and for all process. We are keeping the situation under review on a day-to-day basis. The Reserve Bank of India [Get Quote] is at it, the finance ministry is at it... I'm heading a committee with the finance minister and Commerce Minister (Kamal Nath). So whatever is needed to keep the economy on an even keel will be done.
Fortunately inflation is now becoming less of a problem and if you look at the inflation from a different angle, it is de-seasonlized data.
The situation is turning out to be much better on the inflation front than is evident from this year-on-year figures. That will give us greater maneuverability to deal with the economic situation.
Should we be more proactive in cutting interest rates?
I think as far as interest rates are concerned, that is the preserve of the Reserve Bank of India. It would not be proper for me to comment on this but as I said this is an evolving situation, if inflation rate comes down, if we feel confident that inflation will not be a problem, there is scope for maneuverability, both in more aggressive use of monetary policy and more aggressive use of fiscal policy.
Is the global crisis a failure of capitalism as an ideology or a mistake
Well, financial capital certainly has shown weaknesses. There has been lack of supervision, there has been too much faith that self-interest will make people behave in an enlightened manner. So these are weaknesses of the system, the financial system regulation has been ineffective. But I don't believe that these are inherent in the system.
The Left is saying that they have saved the nation by not allowing the pension bill. Your comment please.
But what has that got to do with this. Even if the pension bill was not there, I don't see the world situation would have been different. We are a small player. Global meltdown is not a crisis which is the result of wrong policies of the Government of India. It is a crisis made outside India. We are the victims of it, not the cause.
Oil prices have come down. Do you intend to respond?
Well we will look at all the options. We have still a considerable deficit on the oil account. This is as I said an evolving situation.
Was there consensus on your point on protectionism?
Yes there is a general agreement that protectionism would be a wrong response to the present situation. It would only accentuate the crisis. Such 'beggar thy neighbor policies' have never worked in the past. They only slowdown and lead to decline of economic activity all around. There is in the communiqu�, I think, a reaffirmation that all countries will resist a recourse to protectionist tendencies.
Would there be an impact on the Doha round of WTO talks?
Yes. A part of the same communiqu� states that this gives urgency to the task of completing the Doha round as early as possible.
Your comments on the capital account convertibility and banking review as stated in your speech at RBI in 2006
When I went to the Reserve Bank some two years ago, I had said that the whole issue of capital account convertibility needs to be relooked at. There was a Tarapore Committee Report, so I suggested that maybe Tarapore should be asked to relook and revisit it. I did not pronounce anything about if we were going to have capital account convertibility or when. It was a suggestion and Reserve Bank followed it up. And that report is a public document.
What about banking sector review?
This is a question about FDI (foreign direct investment) in banking- (indicates to FM)...
Finance minister: The notification was made towards the end of the NDA Government in January-February 2004. All that we said was that since the notification has been made, we will allow foreign capital in private-sector banks. If any Indian investor wants to buy shares in a private-sector bank, he is subject to a voting cap. As long as there is a voting cap new capital will not come into a private-sector bank. We plan to remove the voting cap.
That amendment (reviewing the voting cap) had been introduced in the parliament. Whether it is foreign capital or Indian capital into a private-sector bank, as long as this cap is there no capital is going to come.
Is the government satisfied with the way it has handled the situation (financial crisis)? Will the people of this country vote the government back?
Well, I think we have done reasonably well and I sincerely hope that the people of India would repose their confidence in us.
When would this crisis get over?
I am not an astrologer. I think there are apprehensions that we haven't seen the worst of the crisis. There are conflicting viewpoints. Our efforts must be to contain and rollback the crisis. But how long will it take, I am afraid, I cannot pronounce with any sense of authority.
Are there any apprehensions in India about Obama regime?
No, no. From whatever feedback I have, I think we have no reason to be apprehensive about the change of regime in the United States. There is general recognition in the US regarding the role that India can play, ...India should play. There is considerable appreiciation of the way Indian economy is managed. And more recently, also Obama did send Madeleine Albright and former Congressman Leach to interact with us. They have given us all the positive indication, so there is no reason to have any doubts about the intentions of the Obama administration towards India.
Your response to the approaching elections and the crisis...
Well, as I said the crisis is not our making. What I would like is for the people of India to judge us by the response of our government to this crisis. We acted in time, and while the rest of the world is in doom and gloom, we will still maintain a growth rate of 7.5 per cent. Growth with stability, more socially inclusive growth is a reality and will remain a reality despite the onslaught of the adverse turn in our external environment.
Will the crisis postpone or hasten elections?
It has no bearing on the elections. Elections will be held on schedule.
What has been to IMF's role, as far as the crisis is concerned?
It has been endorsed that more resources should be provided to the International Monetary Fund and the World Bank. At the meeting itself, the Japanese government announced a loan of hundred billion dollars to the IMF. So on the whole I think, the climate in the developed world is to recognise that international institutions need extra resources if they are to come to the rescue of the emerging countries and other developing countries.
Wednesday, August 27, 2008
India to reclaim Mughal-age economic aura in next 50 yrs
India and China are set to become the world's leading economic and political powers in about 50 years reclaiming the glory of the year 1700 when Mughal India and Qing China each accounted for about one-fourth of world GDP, a leading German bank said on Tuesday.
According to data compiled by economic historian Angus Maddison, as recently as 1700, Qing China and Mughal India each represented a little less than 25 per cent of world GDP, but their respective shares dropped to less than 5 per cent by 1950, the Deutsche Bank said in a report.
However, China and India are poised to reclaim their places as the world's largest economies over the next half century, Deutsche Bank Research said in the report.
Noting that the four BRIC nations Brazil, Russia, India and China are characterised by high economic growth rates, large populations and expanding middle classes, the report said China and India would ‘re-emerge as major economic and political powers over the next fifty years or so and China is projected to replace the United States as the world's largest economy by 2040’.
In his book The World Economy: A Millennial Perspective, economic historian Angus Maddison has noted that during the years 0 to 1000, India figured as the world's pre-eminent economic power, closely followed by China. During 1500-1600 years also, India was only next to China in terms of world GDP share and remained among the top till as late as 17th century.
India was the world's largest economy with a 32.9 per cent share of the worldwide GDP in the first century and 28.9 per cent in the 11th century.
According to data compiled by economic historian Angus Maddison, as recently as 1700, Qing China and Mughal India each represented a little less than 25 per cent of world GDP, but their respective shares dropped to less than 5 per cent by 1950, the Deutsche Bank said in a report.
However, China and India are poised to reclaim their places as the world's largest economies over the next half century, Deutsche Bank Research said in the report.
Noting that the four BRIC nations Brazil, Russia, India and China are characterised by high economic growth rates, large populations and expanding middle classes, the report said China and India would ‘re-emerge as major economic and political powers over the next fifty years or so and China is projected to replace the United States as the world's largest economy by 2040’.
In his book The World Economy: A Millennial Perspective, economic historian Angus Maddison has noted that during the years 0 to 1000, India figured as the world's pre-eminent economic power, closely followed by China. During 1500-1600 years also, India was only next to China in terms of world GDP share and remained among the top till as late as 17th century.
India was the world's largest economy with a 32.9 per cent share of the worldwide GDP in the first century and 28.9 per cent in the 11th century.
Tuesday, July 29, 2008
The world's largest economies
India
The Indian economy is the 12th largest in the world. That is, India's gross domestic product stands at $1.171 trillion.
However, in terms of purchasing power parity, India is the world's fourth largest economy. Its GDP in purchasing power parity terms is at $3.092 trillion.
These are the year 2007 figures, recently released by the World Bank.
By definition, purchasing power parity (PPP) is an economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
India is the one of the world's fastest growing economies, yet its annual per capita income remains quite low at $950, or about Rs 40,000. That puts India in the 160th spot.
Incidentally, World Bank figures show that the world's GDP is at $54.347 trillion. India accounts for just over 2 per cent of global GDP.
1. United States
The American GDP is at $13.812 trillion, making it the world's largest economy. It accounts for more than 25 per cent of the entire world's GDP!
In terms of purchasing power parity too, the United States is the world's leading economy.
However, its per capita income at $46,040, per year, pegs it at the 15th spot in the world.
2. Japan
Japan, with a GDP of $4.377 trillion, is the world's second largest economy.
However, in terms of purchasing power parity, Japan is ranked third by the World Bank. It's GDP in PPP terms is $4.283 trillion.
Japan's per capita income (annual) is $37,670, making it the 25th highest in the world.
3. Germany
Germany is the world's third largest, with its GDP at $3.297 trillion.
But in PPP terms, Germany is the world's fifth largest economy. It's GDP in PPP terms is at $2.752 trillion.
Its per capita income is the 23rd highest in the world, at $38,860.
4. China
China, the Asian giant, is the world's fourth largest economy with a GDP of $3.281 trillion; but in purchasing power parity terms it ranks second at $7.055 trillion.
It is the world's fastest growing major economy and its giant strides have taken the world by a storm. Economists predict that over the next few decades, it could topple the US as the world's largest economy.
China's per capita income, however, is still low at $2,630 per year.
5. United Kingdom
Britain is the world's fifth largest economy. Its GDP is at $2.728 trillion.
In purchasing power parity terms, the United Kingdom's GDP stands at $2.082 trillion making it the seventh largest in the world.
Britain is a rich nation. Its per capita income is at an impressive $42,740. That would rank it in the 19th spot
6. France
The French GDP is at $2.563 trillion, making it the world's sixth largest economy; but in terms of PPP, it is the world's 8th largest (GDP in PPP terms, $2.054 trillion).
The per capita income of the French at $38,500 makes them the 24th richest people in the world.
7. Italy
Italy's GDP in absolute terms is at $2.107 trillion. That makes it the planet's seventh largets economy.
However, in purchasing power parity terms its GDP is at $1.780 trillion and its rank is 10th.
Italians' per capita income is the 30th highest in the world. It is $33,540.
8. Spain
Spain is the eighth largest economy with its GDP at $1.429 trillion. In purchasing power parity, however, it slips to the 11th spot ($1.373 trillion).
With a per capita income of $29,450 per year, its people are the 36th richest in the world.
9. Canada
The Canadian GDP stands at $1.326 trillion, making it the world's ninth largest economy.
In PPP terms, however, it stands 14th in the world. Its GDP in PPP terms is at $1.178 trillion.
Its people enjoy a comfortable life with a per capita income of $39,420, which is 22nd highest in the world.
10. Brazil
The Brazilian economy too has been growing at a scorching pace. It is the world's 10th largest economy with a GDP of $1.314 trillion.
But in terms of purchasing power (GDP - $1.834 trillion), it is better placed at number 9.
Amongst the emerging economies, it has one of the best per capita income figures -- $5,910. This places it in the 85th spot in the world
11. Russian Federation
In absolute GDP terms, Russia -- at $1.291 trillion -- is the world's 11th largest economy., but it jumps to the 6th spot in terms of purchasing power parity ($2.088 trillion).
Its per capita income is at $7,650, the 78th highest in the world.
The Indian economy is the 12th largest in the world. That is, India's gross domestic product stands at $1.171 trillion.
However, in terms of purchasing power parity, India is the world's fourth largest economy. Its GDP in purchasing power parity terms is at $3.092 trillion.
These are the year 2007 figures, recently released by the World Bank.
By definition, purchasing power parity (PPP) is an economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
India is the one of the world's fastest growing economies, yet its annual per capita income remains quite low at $950, or about Rs 40,000. That puts India in the 160th spot.
Incidentally, World Bank figures show that the world's GDP is at $54.347 trillion. India accounts for just over 2 per cent of global GDP.
1. United States
The American GDP is at $13.812 trillion, making it the world's largest economy. It accounts for more than 25 per cent of the entire world's GDP!
In terms of purchasing power parity too, the United States is the world's leading economy.
However, its per capita income at $46,040, per year, pegs it at the 15th spot in the world.
2. Japan
Japan, with a GDP of $4.377 trillion, is the world's second largest economy.
However, in terms of purchasing power parity, Japan is ranked third by the World Bank. It's GDP in PPP terms is $4.283 trillion.
Japan's per capita income (annual) is $37,670, making it the 25th highest in the world.
3. Germany
Germany is the world's third largest, with its GDP at $3.297 trillion.
But in PPP terms, Germany is the world's fifth largest economy. It's GDP in PPP terms is at $2.752 trillion.
Its per capita income is the 23rd highest in the world, at $38,860.
4. China
China, the Asian giant, is the world's fourth largest economy with a GDP of $3.281 trillion; but in purchasing power parity terms it ranks second at $7.055 trillion.
It is the world's fastest growing major economy and its giant strides have taken the world by a storm. Economists predict that over the next few decades, it could topple the US as the world's largest economy.
China's per capita income, however, is still low at $2,630 per year.
5. United Kingdom
Britain is the world's fifth largest economy. Its GDP is at $2.728 trillion.
In purchasing power parity terms, the United Kingdom's GDP stands at $2.082 trillion making it the seventh largest in the world.
Britain is a rich nation. Its per capita income is at an impressive $42,740. That would rank it in the 19th spot
6. France
The French GDP is at $2.563 trillion, making it the world's sixth largest economy; but in terms of PPP, it is the world's 8th largest (GDP in PPP terms, $2.054 trillion).
The per capita income of the French at $38,500 makes them the 24th richest people in the world.
7. Italy
Italy's GDP in absolute terms is at $2.107 trillion. That makes it the planet's seventh largets economy.
However, in purchasing power parity terms its GDP is at $1.780 trillion and its rank is 10th.
Italians' per capita income is the 30th highest in the world. It is $33,540.
8. Spain
Spain is the eighth largest economy with its GDP at $1.429 trillion. In purchasing power parity, however, it slips to the 11th spot ($1.373 trillion).
With a per capita income of $29,450 per year, its people are the 36th richest in the world.
9. Canada
The Canadian GDP stands at $1.326 trillion, making it the world's ninth largest economy.
In PPP terms, however, it stands 14th in the world. Its GDP in PPP terms is at $1.178 trillion.
Its people enjoy a comfortable life with a per capita income of $39,420, which is 22nd highest in the world.
10. Brazil
The Brazilian economy too has been growing at a scorching pace. It is the world's 10th largest economy with a GDP of $1.314 trillion.
But in terms of purchasing power (GDP - $1.834 trillion), it is better placed at number 9.
Amongst the emerging economies, it has one of the best per capita income figures -- $5,910. This places it in the 85th spot in the world
11. Russian Federation
In absolute GDP terms, Russia -- at $1.291 trillion -- is the world's 11th largest economy., but it jumps to the 6th spot in terms of purchasing power parity ($2.088 trillion).
Its per capita income is at $7,650, the 78th highest in the world.
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