Where is the economy heading

Posted by | April 9, 2008 | Current Affairs | No Comments

I have always wondered about the rate of growth in India and the growing rate of Inflation. What would be the outcome? My question seems to be answered with Reuters blog, which seems to analyze both Indian and Chinese economy. Elvis Picardo’s * article in ‘Reuters’ has analyzed the trend in both these markets. According to a study, India and China though boasts of a growth trend in the stock market as follows:- “China’s benchmark CSI-300 index is still up almost 250 percent over the past two years. India’s BSE-30 or Sensex index has surged 390 percent over the past five years.” Yet this year there is a massive drop in the performance with a drop of 28% in case of China and 22% in case of India.

In the flip side both countries currency seems to have appreciated by about 16%and as you all know inflation in case of India has touched the staggering 7% level and that of china at 8%. The second concern that Picardo writes about is called as valuation and when investors take a hard look at the stock markets in both the countries, it may be that the stock markets might be overvalued.

Yes I agree with Picardo when he says that the party has been good so far but both the countries need to look at the situation right now and take steps to improve the situation

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