Concerns are rife about the medium-term outlook in many economies but structural factors like per capita income and demographic trends are likely to favour India and Indonesia over other emerging markets for the time being, says a report.
According to a research by Deutsche Bank, the economic growth gap between major Asian emerging market and the rest will remain significant.
As per the report, while there is an economic slump in Brazil and Russia, two countries hit particularly hard by the commodity slump, broader structural trends like per capita income levels and demographic trends favour India and Indonesia over all other major emerging markets.
“The gap has always existed, but leaving aside China it seems to be widening,” the report said.
The factors that are acting in favour of India and Indonesia include low per capita income compared with other major emerging markets and favorable demographic outlook.
“Neither the middle-income trap nor demographic drag will be constraining economic growth in India and Indonesia for the foreseeable future,” the report said adding “a combination of macro-stability and moderately supportive policies aimed at raising the physical capital stock, including infrastructure, should suffice to maintain high economic growth rates.
The report said the finding however does not meant to suggest that broader, productivity-enhancing reform would not be desirable in terms of raising potential growth in emerging market “just that important structural factors will favour India and Indonesia over the other emerging market for the time being”, it added.