It was expected that China would be more affected by the slowdown in the global economy, given its dependence on export markets for growth. For the same reason, it was expected that India, a more domestically driven economy, would be less affected — in 2009, goods and services exports comprised 40% of GDP in China, against 20% in India.
Although, in 2010, it may have seemed that this was indeed the case, in retrospect, the reverse seems to have happened, i.e, India has slowed more than China. As a result, Indonesia, which like India, is a more domestically-driven economy — goods and services exports at 24% of GDP in 2009 — has now replaced India as the second-fastest growing major economy. We need to understand why this is the case so that corrective steps can be taken……Read More