Prime Minister Narendra Modi has an ambitious target for India.
He hopes by 2015, the economy will double in size to $5 trillion – making India the fourth-largest economy behind the US, China and Japan.
Right now, Modi could miss that target, just like his promise to create 10 million jobs a year during his first term.
To become a $5 trillion economy India would need to sustain a growth rate of 8 percent and more for a couple of years. Very few nations have managed to sustain that level of growth; China, South Korea and Japan are exceptions.
India’s gross domestic product (GDP) sank to just 5 percent in the April to June quarter, but the government maintains the economy will expand by 7 percent this year. Independent economists disagree, with some of them saying that India is in recession.
Unemployment is at a 45-year high of 6.1 percent, and almost 300,000 people in India’s auto sector alone have lost their jobs in recent months.
If growth does not improve, hopes of creating jobs for the one million young people who join the workforce every month will be dashed.
To reduce income inequality and reduce poverty, India has a fair way to go. Just to underscore the challenge India is facing despite being the seventh biggest economy: its income per capita is about $2,000 a year. In comparison, China’s per capita income is $9,800.
So how serious is India’s economic slowdown? Can Modi deliver on his promise of a $5 trillion economy or is the country headed towards recession?
“I don’t think we are there yet,” says Miguel Chanco, senior Asia economist at Pantheon Macroeconomics. “Certainly some industries are feeling recession-like conditions … but if you look at other major parts of the economy, for example, the IT and BPO service export industries, they are doing well … So, yes, five percent growth is the lowest in over five years, but at the same time that’s still pretty respectable given the current global economic environment.”
How will Brexit affect Ireland’s economy?
Ireland is the only European Union country to share a land border with the United Kingdom.
The deadlock over the Irish border has held up a Brexit deal between Brussels and London.
A hard Brexit would be detrimental to Ireland’s farmers who export most of their produce. And as the capital makes preparations for Brexit, the influx of big businesses and property developers is pushing out Dubliners. Al Jazeera’s Laurence Lee takes a look at Brexit’s effect on urban and rural areas.
Economists believe that Ireland’s economy could suffer a hit of somewhere between 4-7 percent in a decade’s time, thanks to Brexit.
“It’s a very serious situation … we have to be realistic about the possibility – if not the probability – of a hard Brexit … No part of the economy is immune to it because of the sheer extent of the relationships between Ireland and the UK,” says John McGrane, the director general of the British Irish Chamber of Commerce.
“The reality is that a hard Brexit on October 31 would have an effect within days on the two-way trade in goods and some services between the two Irelands.”
Source: Al Jazeera News