ROACH ON INDIA AND CHINA

WHY INDIA IS RISKIER THAN CHINA

But while the latter is in better shape, neither economy is likely to implode on its own

Stephen S Roach

Today, Dec 29, 2011

Asia's developing and newly industrialised economies grew at an 8.5 per cent average annual rate over 2010-11 - nearly triple the 3 per cent growth elsewhere in the world. If China and India are next to fall, Asia would be at risk, and it would be hard to avoid a global recession.

In one important sense, these concerns are understandable: Both economies depend heavily on the broader global climate.

China is sensitive to downside risks to external demand - more relevant than ever since crisis-torn Europe and the United States collectively accounted for 38 per cent of total exports in the past year. But India, with its large current-account deficit and external funding needs, is more exposed to tough conditions in global financial markets.

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