The Macro Brief by HSBC Global Research
Forces for growth in India and Indonesia
Oct 13, 2023
Janet Henry chats with Pranjul Bhandari about growth prospects in India and Indonesia, focusing on demographic factors, modern services' spillover effect on manufacturing, job market strength, urban growth, and the impact of oil prices. The speakers also discuss India's external finances and the potential for higher growth in the next decade. Additionally, they explore promising sectors, such as Indonesia's move towards processing metals, and the potential growth in the EV ecosystem in both countries.
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Quick takeaways
- India's modern services sector has experienced rapid growth, contributing to increased revenue and employment opportunities.
- Despite global challenges, India's economy has shown resilience, with strong urban growth and potential for easing interest rates.
Deep dives
India's Comparative Advantage in Services and Shift towards Manufacturing
India's modern services sector, including IT services exports, has experienced rapid growth, offering a range of professional services beyond just call centers. Multinational companies have established their global capability centers in India, contributing to increased revenue. A notable trend is the movement from services to manufacturing, with MNCs setting up manufacturing plants in sectors like medical equipment and high-precision manufacturing. Even domestic startups are transitioning from services to manufacturing. The challenge lies in ensuring inclusive growth and providing employment opportunities for the majority of India's population.
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