The Potential Impact of India's Economic Efforts
India is making economic moves that could contribute to meaningful forward strides for the country and contribute to a positive outlook for emerging markets. India has invested a significant amount of capital recently in endeavors that expand potential economic activity. For instance, in the largest deal ever of its kind, Air India recently entered into an agreement to purchase 470 commercial aircraft from Boeing and Airbus.
In addition, companies in the automotive and tech industries, including Apple, have been shifting supply chains toward India. This shift is at the expense of China as manufacturers seek to mitigate geopolitical risks associated with Beijing’s global relationships and policy decisions.
Looking at downside risk is also important, and the economy of India is not without it. Corruption and stock manipulation allegations against Indian billionaire Gautam Adani, who has close ties to government finances, have somewhat tempered optimism regarding ambitious government-funded growth.
Furthermore, a global trend of rising interest rates to combat pervasive inflation increases the cost of borrowing to fund new projects, as well as the threat of default for developing, highly-leveraged nations in the event of a global economic downturn.
Overall, India presents an interesting combination of upside potential and downside risk for tactical and strategic investors to assess as they rebalance their portfolios.
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- Anthony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management
