Excitement is returning and countering lingering anxiety at Davos as growth returns in key economies like US, China and India. The International Monetary Fund’s assessment about global growth returning is bringing cheer to investors gathered at Davos. IMF has estimated that the top seven economies of the world India, Japan, UK, US, China, France, and Germany grew by 1.7% last year. For India alone, the growth forecast for 2018 is more than 7.4%.
The global economy will grow 3.9%, which indicates that recovery is more comprehensive than anticipated.
India seems to be leading the pack of this rebounded growth and Prime Minister Narendra Modi emphasised it in his conversations with business leaders in Davos. “The Prime Minister’s address and conversations show that India is doing business and not talking about it,” Chairman of Vedanta Group Anil Agarwal told me at Davos.
In his meeting, Mr Modi was direct in his answers to the queries raised by investors. While he admitted the challenges that remain at certain levels in the government, he promised to continue his effort to make life easier for domestic and global investors. Mr Modi laid extra emphasis on the new generation of entrepreneurs of the country.
The global investor community has become far less skeptical of the India story. “We look at India as a massive growth market. Its growth potential is accelerating,” Martin Mackay, President Asia Pacific of CA Technologies told me in a conversation at Davos. The $4 billion technology company is shifting gears as it expands its presence in Asia with special focus on India.
The sentiment is marked by the PwC CEO survey released at Davos. Over 57% of the 1,300 CEOs surveyed were positive about growth in 2018. The rise in global markets along with GDP figures are allowing the CEOs to overcome their pessimism about growth. The survey also boosted India’s rank as an investment destination to among the top 5 in the world. US, China and Germany were the top three. France and India were in position 4 and 5. India rose a few notches to edge out Japan from the top 5 slot.
From the Indian perspective, this is a good time to position itself as an investment destination. Mr Modi’s call for a new globalism reflected his focus on new India. He spoke of a collaborative atmosphere where countries would come together to counter climate change, terrorism and social inequity.
The repackaging of India as more than just an investment destination is a strategic move by the prime ministers. Investors feel better about entering a country that is seen as a leader in non-business issues. India’s leadership on climate change marks its maturity in stark contrast to the US, which is in denial over environmental issues. By invoking the India philosophy of Vasudev Kutumbakam (the world is a family). Mr Modi also underlined India’s distaste for disputes and conflicts with other countries. Investors worry about China since it has geographical disputes with many nations. Harvard University’s Prof Kenneth Rogoff told the audience at Davos that China is showing signs of financial crisis.
