Silhouettes of workers in the sunset at the construction site of the Mumbai Coastal Road Project.
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India is not the new China, and the emerging superpower is marching at its own pace and could “enjoy some very high growth years”, Riedel Research Group said.
“(I’m) very, very bullish on India, they’re doing all the right things and there’s a good chance they will beat expectations in the next six to 24 months,” said David Riedel, chief executive of the equity research and analysis firm. told CNBC in an email.
“Definitely prefer India over China,” he continued. “China’s economy is much larger, but this is a notable shift as India’s performance has long lagged China’s.”
Riddle also insisted that India is a “very different country” from China today and in the past.
Riddell said India is successfully escaping the middle-income growth trap with multiple tools in its toolbox, such as economic monetization and digitization and changes in the tax structure.
The middle income trap is a Economic development Growing economies stagnate at middle-income status and fail to join the ranks of high-income countries.
“I think it has a chance to enjoy some very high growth years, and I think that’s what investors should be looking for,” he told “Street Signs Asia” on Friday.
India is forecast to overtake Japan and Germany to become the world’s third largest economy by the end of the decade S&P Global Last December and Morgan Stanley.
There were also some bright spots in outsourcing and finance.
“It’s really been a decade of expansion for financial services in India,” Manish Chokhani, director at Enam Holdings, told CNBC’s “Street Signs Asia” on Thursday.
“The whole mutual fund business, the private sector banking business … they really have a decade to grow.”
China’s outlook is bleak
On the other hand, China’s growth trajectory may not be as rosy as before.
Riedel predicts that China will not be as powerful in the next five years as it has been in the past five years.He cited some headwinds such as Urban youth unemployment remains high and supply chains are increasingly being shifted away from China.
In May, the unemployment rate among Chinese youth aged 16 to 24 rose to a record high of 20.8%.
China also recently released a series of weaker-than-expected economic data, suggesting that growth momentum is weakening. China’s factory activity contracted again in June, while non-manufacturing activity was at its weakest level since Beijing abandoned its strict “zero-coronavirus” policy late last year.
That said, Riddell said he was seeing some green shoots in certain consumer and tourism sectors as a result of the COVID-19 lockdowns.
“I’m not long-term bearish on China. I just have a harder time finding opportunities now.”