MYSORE, India, December 28, 2015 /PRNewswire/ --
Dr. Gita Gopinath John Zwaanstra Professor of International Studies and of Economics, Department of Economics, Harvard University, USA delivered a talk on 'Global economic trends and its implications for India,' at the MYRA School of Business, Mysore, on Tuesday the 22nd of December 2015.
The large audience gathered at the Athena Auditorium were mesmerized by Dr. Gopinath's amazing lecture and her scholarly perspective on the global macroeconomic scenario and its implications for the Indian economy. Dr. Gopinath began by noting that the current global economic scenario is in a very interesting phase. We are coming out of the serious crisis of recession of 2008. We see signs of recovery and the global economy repairing itself. Now is a good time to pause, look ahead and see where the world is going, she said. There are certain kinds of trends that are well established. While the global economy is recovering, there are multiple tracks with different countries going through different trends in the recovery process -- the advanced countries have bottomed out in terms of growth rate and now their growth rate is steadily bouncing back, while the emerging markets led by China grew at a high rate during the aftermath of the recession of 2008, but now have slowed down. So the overall situation in terms of growth rate has reversed now, she said and set the context for the theme of the talk.
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Dr. Gopinath outlined four major trends that are currently playing out in the global economic field -- China's slowing growth; collapse in the commodity prices; beginning of the end of easy money; and the inherent weaknesses in the developed economies especially the increasingly aging population.
- The current scenario of slowing of the emerging markets especially the diminishing rates of GDP growth in China and its immense negative effect on the entire global economy with the steady decline in the exports of different countries to China. China accounts for 10% of the world's imports. Demand for imports comes from China, and if the Chinese economy is slowing down, then it means big trouble for countries that are exporting heavily to China.
- The collapse in the commodity prices which has sent a chill down the spine of commodity investors -- a huge drop of up to 40% in a year. That drop has come about because of China slowing down. For example, China was responsible for half of the demand for metal. The OPEC has brought down the crude oil prices. IMF has stated that 2016 is not going to be any different. This sudden plunge in prices of commodities has set in a macroeconomic bubble.
- The beginning of the end of low interest rates -- the tightening of the monetary and fiscal policies to bring down inflation rates. In the last five years, many of the governments and the big corporations started borrowing heavily from the US resulting in a huge build up of debt in emerging markets. This debt is not in the balance sheets of banks but in the balance sheets of large companies in the emerging markets, which is a new trend. With the commodities prices falling, there is a serious concern about the debt build-up and its impact.
- The inherent weaknesses in the developed economies and the source of them, is the aging population. The demographic trends of rising life expectancy with an increase in aging population in advanced economies has had a negative impact on the global economy with a steep decline in the ratio of working population to retired population. The other weakness is that of the reduction in the productivity growth which has come to a standstill. This trend represents the most critical long-term economic dilemma facing the developed world. The big implications are on the fiscal side -- increased social security and related costs on the budgets with a significant amount of the population being retired and trying to live off the wealth it generated during its working years, she elaborated.
What then are the implications of these global economic trends on the Indian economy? Dr. Gopinath said there is good news to cheer for India. While most emerging markets are exposed to the negative shocks due to the Chinese slowdown and the crashing commodity prices, India -- being a big commodity importer, is in a rather privileged position, she said. The China slowdown has not had a major negative effect on India as India's export to China is small--4%. The high borrowing interests are also not bothering India too much. Given that India has a young working force, the demographic aging trends and their negative impacts is not a major concern to India either.
Responding to the questions from the audience, Dr. Gopinath spoke on -- the global currency issues; stagnation of Total Factor Productivity (TFP), increasing environmental concerns; distribution of agri-products, etc. While each country is trying to do its bit, and new employment opportunities have opened up with the solar projects, waste management programs and such, yet on the global front, there is no teeth to it, she said. Implementation of the right technologies can address a few of these problems, she added. Dr. Gopinath took pains to reflect on each one of the questions and gave her perspective.
Dr. Gita Gopinath, who has a number of laurels to her credit including the 'Young Global Leader Award' by the World Economic Forum in 2011, was inducted into the Women Achievers' Hall of Fame (WAH!) at MYRA School of Business, Mysore, by Mr. Ashok Baweja, Head, Quest Global Defense and Former Chairman of Hindustan Aeronautics Limited (HAL). Mrs. Rashmi Bansal, the well-known author was inducted into Women Achievers' Hall of fame (WAH!) in 2014.
Mr. Ashok Baweja in his address wished her more success and hoped to see her reach many more heights.
Dr. Shalini R Urs, Founder and Chairperson, MYRA, welcomed Dr. Gopinath with enormous pride -- from one Mysorean to another, highlighting her contributions to the field of macroeconomics, especially the fiscal devaluation studies. Dr. Gopinath's journey from Mysore to Harvard is truly remarkable and inspiring to young minds, she said in her welcome address.
Dr. Sudhendar Rao, Professor of Information Systems at MYRA, in his valedictory address said that her talk on the global economic situation was like a capstone course to the just-concluded course on Economics and the on-going course on Global Competitiveness at MYRA.
Dr. M N Panini, Distinguished Professor, Centre of Excellence for Sustainable Business Innovations (CESBI), read out the citation.
Dr. Shrijay Devaraj Urs, Executive Director, MYRA, Faculty, staff, students, many academic and prominent citizens of Mysore formed the audience.
About MYRA School of Business
The MYRA School of Business is a boutique B School located in the royal city of Mysore-an educational hub and a heritage city. MYRA's unique learning platform blends Indian and Western perspectives and teaching methods to add intellectual diversity in the classroom by bringing faculty from some of the top B Schools in the world such as Cornell, Kellogg, Cambridge, IIMs and others. MYRA's Study abroad program partners include W.P. Cary School of Business, Arizona State University, USA; Catolica-Lisbon School of Business and Economics, Portugal; The University of Washington, Bothell, US and the Julius Maximilian University of Würzburg in Germany.
MYRA offers four academic programs- the two-year-AICTE approved, Post Graduate Diploma in Business Management (PGDM); the one-year Post Graduate Program for executives (PGPX); Customized Executive Education Programs and PhD (University of Mysore) program. MYRA, delivers "MORE" for less, offering a truly international learning experience in a uniquely MYRA way. Our enviable list of global faculty; study abroad programs in European and American Universities; innovative Immersion Learning Model and cutting-edge curriculum equip our students with diverse perspectives on management and have bestowed upon MYRA the tag of 'global Indian school'.
For more details: http://www.myra.ac.in
Executive Assistant, MYRA School of Business
SOURCE MYRA School of Business