It's Beginning to Look a Lot Like 2009 in India

When economists talked about the global recovery over the last three years, they weren't talking about the West. They were talking about the rest of the globe, in particular: India, China, and Brazil, economies with nearly double-digit growth. That's one big reason to worry about India, which is withering under high inflation and slowing exports. A trio of scary graphs:

Screen Shot 2011-12-23 at 11.04.41 AM.pngScreen Shot 2011-12-23 at 11.04.55 AM.pngScreen Shot 2011-12-23 at 11.08.07 AM.png

Here's what these graphs, courtesy of Wells Fargo, won't tell you. In 2009, import and export plummeted in India, and even reversed for part of the year. That's not happening today. In fact, Indian exports have been a bright spot, growing as much as 50 percent year-over-year.

Here's what the graphs do tell you: Once you get past mid-year export growth, there's not a lot of good news coming out of India. Inflation is near 10 percent, which is even worse news than it sounds, since Indian families spend as much as 30 percent of their income on inflation-sensitive food. GDP growth is down, industrial production is slowing, and investors are shirking away from Indian assets. All that means the India is inauspiciously reliant on a global economy that is feeling even more vulnerable. Twenty percent of its exports go to the EU, which is on the precipice of ... well, who even knows right now. Another 20 percent go to Asian economies, many of which are experiencing their own slowdowns.

The vast majority of India's growth in the last few years has come from the service sector and service exports, such as business process outsourcing and call centers. "The service sector has accounted for essentially all of the growth in Indian value added over the past four quarters," Wells Fargo reports. If European growth turns negative and China's economy slows to six percent growth (blazingly fast by our standards; practically a recession by China's), India has a lot to worry about. And, therefore, so do we.

>

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Never Tell People How Old They Look

Age discrimination affects us all. Who cares about youth? James Hamblin turns to his colleague Jeffrey Goldberg for advice.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Never Tell People How Old They Look

Age discrimination affects us all. James Hamblin turns to a colleague for advice.

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

Video

Pittsburgh: 'Better Than You Thought'

How Steel City became a bikeable, walkable paradise

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

More in Business

Just In