Speaker 1: You're listening to Asia Centric from Bloomberg Intelligence, the podcast
Speaker 1: that explores the big ideas in trans moving money across
Speaker 1: the region. I'm John Lee in Hong Kong, and I'm.
Speaker 2: Katidmitriva, also in Hong Kong.
Speaker 1: Katya, were literally days away from President Trump being inaugurated.
Speaker 2: Yeah, that's right, full disclosure. We're recruiting this a week
Speaker 2: in advance. But yes, right now as the listener is listening,
Speaker 2: we're a few days away from January twentieth and the inauguration,
Speaker 2: and I mean something we've been looking forward to for
Speaker 2: a while. Last time around, it was chaotic in DC,
Speaker 2: but I think it was probably even more chaotic here
Speaker 2: in Asia.
Speaker 1: Absolutely, right. A lot of the Asian economies bore the
Speaker 1: brunt of the protectionist policies, namely China, but there were
Speaker 1: also some countries that benefited.
Speaker 2: Yeah, there were a lot of countries in Southeast Asia
Speaker 2: in particular. I mean you look to Vietnam and Malaysia
Speaker 2: and some of these countries where a lot of production shifted,
Speaker 2: and this time they might actually be in the crosshairs.
Speaker 1: That's right, And today we have the perfect guest to
Speaker 1: discuss all these issues. We have soul No Varma, chief
Speaker 1: economists for the Asia Pacific Extra PAN region at MURA,
Speaker 1: based in Singapore.
Speaker 3: Sauna welcome, Thank you, Verma, John and Katya. Pleasure to
Speaker 3: be here.
Speaker 2: Great to have you here. You began covering Asia economies
Speaker 2: kind of in mid twenty nineteen. You had covered some before,
Speaker 2: but of course your role expanded. Basically it was in
Speaker 2: the heart of the first trade war. So just to
Speaker 2: give us an idea, I mean, what was that time, like,
Speaker 2: give us maybe a preview of what we should expect
Speaker 2: in the next four years.
Speaker 3: Yeah, I think the bottom line has buckled up. I
Speaker 3: think you know, back then it clearly appeared off way
Speaker 3: elevated uncertainty, uncertainty with respect to what really Trump stood for,
Speaker 3: whether it was just campaign rhetoric or we would see
Speaker 3: implementation of some of the threads. Then there was uncertain
Speaker 3: with respect to the timing of when the tariffs would
Speaker 3: be imposed, the tit for tat retaliation that we saw
Speaker 3: between US and China, China's currency weakening, its pillovers onto Asia,
Speaker 3: and as you said, I mean we did see losers
Speaker 3: and winners from US China trade tensions. And you know,
Speaker 3: when we talk about the countries that were losers. It
Speaker 3: was not just China. In fact, it was some of
Speaker 3: the more open economies in the region that were hurt
Speaker 3: by much more than China. But there were winners in
Speaker 3: Southeast Asia from trade diversion, some countries actually even outside
Speaker 3: Southeast Asia, which benefited from reshoring of some of the
Speaker 3: production supply chains. And of course the relocation and the
Speaker 3: China plus one strategy that has gained traction and continues
Speaker 3: to gain traction. So we'll see a lot of this
Speaker 3: for sure in the next four years. But I think
Speaker 3: there are also a few things that are a bit
Speaker 3: different this time. You know, back during Trump one point, oh,
Speaker 3: it took almost one year for the tariffs to get implemented.
Speaker 3: This time around, you know, our view is he's going
Speaker 3: to implement the tariffs fairly quickly. Obviously, the tariffs are
Speaker 3: also not just on China. You know, the threat is
Speaker 3: across the board this time around, so that's quite different
Speaker 3: to his first term. I would say Asia is also
Speaker 3: a bit more prepared this time, so when you look
Speaker 3: across the region, you actually see policymakers preparing for different scenarios.
Speaker 3: You know, do we buy more energy from US, do
Speaker 3: we buy more defense from US. Should we be lowering
Speaker 3: some of our import tariffs.
Speaker 2: Preemptively trying to keep Trump happy preemptively.
Speaker 3: Well, they're preparing for scenarios. They don't know what exactly
Speaker 3: to expect. So Asia is clearly preparing this time. But
Speaker 3: I do think, you know, trade diversion as we saw
Speaker 3: during the first term is not going to be as
Speaker 3: easy this time. I mean, there's talk about plugging some
Speaker 3: of the loopholes in terms of the trade diversion that's
Speaker 3: taken place. And from a more macro perspective, you know,
Speaker 3: what's different is really US is entering the second Trump
Speaker 3: presidency with a very high inflation and that makes the
Speaker 3: sort of US macro environment a lot more challenging from
Speaker 3: Asia's perspective as well, in terms of FED policy, and
Speaker 3: also China economically is much weaker today in fact countries,
Speaker 3: you know, bearing some of the adverse impact from its
Speaker 3: over capacity. So some things are similar, but there are
Speaker 3: also a few things that seem to be a bit different.
Speaker 1: And you did mention how inflation is elevated in the
Speaker 1: US and despite all what you know, the incoming Trump
Speaker 1: administration is saying. I think they probably know that tariff's
Speaker 1: increases inflation. Do you think that they will actually, you know,
Speaker 1: to a widespread ten to tariff across all imports. Do
Speaker 1: you think it's going to be less? And what do
Speaker 1: you think they're going to impose on China?
Speaker 3: You know, that is actually the million or billion dollar
Speaker 3: question right now, and there is clearly a lot of
Speaker 3: uncertainty around this. The question is whether this is just
Speaker 3: a negotiating ploy or we will actually see an implementation.
Speaker 3: What's very clear is that trade policy is at the
Speaker 3: forefront of Trump's agenda. It's actually something he's believed in
Speaker 3: you for many, many decades actually, and the agenda is
Speaker 3: really to get us manufacturing back, to get some of
Speaker 3: the jobs back into the US and really reduce the
Speaker 3: reliance on China. And his focus is on reducing the
Speaker 3: trade imbalance that is built up between US and rest
Speaker 3: of the world. You know, China, Mexico, Vietnam. These are
Speaker 3: obviously there in the top countries which run a large
Speaker 3: trade surplus with the US, but there are a lot
Speaker 3: of other countries as well. So I think we should
Speaker 3: take what he's saying more seriously. There are trade offs
Speaker 3: even for the US in terms of, as you say,
Speaker 3: the risk of higher inflation from the implementation. But if
Speaker 3: the game plan is medium term getting more resilient US back,
Speaker 3: then the implementation is quite likely. So I mean, our
Speaker 3: base case at Nomera is that he is likely to
Speaker 3: follow through on his campaign rhetoric. So we're expecting these
Speaker 3: sixty percent tariff on China and around ten percent on
Speaker 3: the rest of the world, and the implementation we think
Speaker 3: will be fairly quick. It's not going to be delayed
Speaker 3: as was the case in the first term, and you know,
Speaker 3: should get implemented through the course of twenty twenty five.
Speaker 3: So yes, I think we need to be prepared.
Speaker 2: So now you mentioned something there just now before moving
Speaker 2: on to broader Asia. You know, it might seem obvious,
Speaker 2: but I think it's worth exploring this idea that Trump
Speaker 2: wants to reduce the US reliance on China. But as
Speaker 2: an economist, you know, I wanted to ask is that
Speaker 2: even possible? Because yes, imports into the US from China
Speaker 2: have gone down since twenty eighteen, But I mean, you
Speaker 2: have to think about transshipments, you have to think about
Speaker 2: parts that are in other goods. Is it really even
Speaker 2: possible to cut China out as much as he's hoping to.
Speaker 3: It's not at all easy, and what we've seen in
Speaker 3: the last twenty class years is just how vital China
Speaker 3: is in the entire global supply chains. In fact, I mean,
Speaker 3: I would say, actually meaning off China is going to
Speaker 3: be extremely difficult. Even you know, when we think of
Speaker 3: countries like Vietnam, for instance, if a textile manufacturing has
Speaker 3: moved to Vietnam, they are still importing the buttons from China.
Speaker 3: So China is so critical in terms of the supply
Speaker 3: of these intermediate products that it's actually going to be
Speaker 3: very difficult. Like even if you move the supply chain
Speaker 3: out of China, these new emerging supply chains actually still
Speaker 3: depend on China to make these intermediate products. So it's
Speaker 3: going to be tough. Now. I think specifically for US,
Speaker 3: you know, their focus is a lot more on some
Speaker 3: specific product categories. I don't think US is trying to
Speaker 3: bring Doyt manufacturing back, right, so you know, when it
Speaker 3: comes to some of the low tech manufactured products or
Speaker 3: mid tech manufactured products, there's still space for these supply
Speaker 3: chains to be outside US. But there are specific products,
Speaker 3: particularly ones that are you know, of importance from a
Speaker 3: national security and from a more strategic perspective, whether it's steel, semiconductors,
Speaker 3: and you know, areas where US wants to focus on,
Speaker 3: could be auto's, some of the green tech products. Those
Speaker 3: are the supply chains where there is clearly a lot
Speaker 3: more focus to actually get manufacturing back. So so yeah,
Speaker 3: it's tricky.
Speaker 1: You also mentioned another interesting fact you've mentioned. Under Trump
Speaker 1: one point zero, there's a lot of reshuring which benefited
Speaker 1: you know, obviously countries like you know, Vietnam, Malaysia, But
Speaker 1: you mentioned that it's going to be a lot more
Speaker 1: difficult this time around. Can you explain and does that
Speaker 1: mean that maybe Southeast Asia will not benefit as much
Speaker 1: as previously thought.
Speaker 3: I think the one interesting thing actually this time around
Speaker 3: is the focus on some of the third countries that
Speaker 3: have been used to bypass trade tariffs. So, for instance,
Speaker 3: if you look at the trade between US and China,
Speaker 3: China's exports to the US or China's shared and US
Speaker 3: imports has declined, which was basically the objective, But we
Speaker 3: have seen an increase in the share of exports from
Speaker 3: Mexico and from Vietnam in some cases. I won't say
Speaker 3: this is true in all, but in some cases actually
Speaker 3: the local value edition that is being done by some
Speaker 3: of the manufacturers in these countries is not very high.
Speaker 3: So there is a clear case of bypassing tariffs that
Speaker 3: has been done, and this is something that is in
Speaker 3: focus in the second Trump presidency. Now I don't think
Speaker 3: it's going to be very easy to implement this, like
Speaker 3: how do you you know, exactly estimate which product is
Speaker 3: seeing more valuation versus you know, less valuation. And it's
Speaker 3: extremely complicated because we're talking about, you know, not at
Speaker 3: a country level, it's at a product level, and then
Speaker 3: within a product there are different kinds of products. So
Speaker 3: implementation is going to be very difficult. But basically, the
Speaker 3: countries that have benefited purely because of trade diversion and
Speaker 3: no additional local valuation could be at risk of tariff
Speaker 3: in this second Trump presidency. But it also I think
Speaker 3: there is still space for countries actually to benefit. So,
Speaker 3: for instance, countries where the local valuation is much higher
Speaker 3: can still benefit in the second Trump presidency. Some of
Speaker 3: the low tech manufactured products or the mid tech manufactured
Speaker 3: products where supply chains are still shifting, there are countries
Speaker 3: that can actually still benefit. So we had actually done
Speaker 3: a report in mid twenty twenty four looking at basically
Speaker 3: data for about seventeen eighteen months, covering about a sample
Speaker 3: of one hundred and thirty companies to basically identify which
Speaker 3: countries were actually benefiting from supply chain shifts. You know,
Speaker 3: we'd done a similar study back in twenty nineteen, and
Speaker 3: then we updated the study in twenty twenty four. So
Speaker 3: what was interesting is that during the twenty nineteen study,
Speaker 3: it was actually largely Vietnam that was benefiting from the
Speaker 3: supply chain in shifts. But in the more recent study
Speaker 3: that we did, actually India emerged as the biggest beneficiary
Speaker 3: from these supply chain shifts that are ongoing in sectors
Speaker 3: like electronics. Obviously smartphones is one sector where India is benefiting,
Speaker 3: but also Malaysia which is up and coming in terms
Speaker 3: of again electronics, in data center, in semiconductor assembly and testing.
Speaker 3: And what's interesting is that you know who's investing in
Speaker 3: these countries. So unlike Vietnam, where a lot of the
Speaker 3: investments have also come from China, in India, bulk of
Speaker 3: the investments have actually been from US, European or Developed
Speaker 3: Asian multinational companies. Similarly, in Malaysia, it's a bit more mixed,
Speaker 3: So I think there will still be beneficiaries, but obviously
Speaker 3: the loopholes are going to get closed.
Speaker 2: Yeah, you mentioned the loopholes there. There was a Harvard
Speaker 2: business paper that I was reading that estimated that it
Speaker 2: was about sixteen percent. One six up to sixteen percent,
Speaker 2: I should say, of goods that were shipped from Vietnam
Speaker 2: to the US were actually that transshipment that you're talking about.
Speaker 2: In other words, it wasn't necessarily anything that local manufacturers
Speaker 2: were adding value. It was purely putting it in a box,
Speaker 2: slapping a label on it saying it was from Vietnam
Speaker 2: and not China. But to your point, it is so
Speaker 2: difficult to first of all identify that there's a whole,
Speaker 2: and it's not just difficult, but it's also a lengthy process.
Speaker 2: What is your assumption in terms of the perhaps the
Speaker 2: flow of tariffs. You know, we've been promised by Trump
Speaker 2: on day one tariffs potentially on Mexico and Canada. We
Speaker 2: know he's going to add tariffs on China. But sort
Speaker 2: of the order of it and the magnitude of course
Speaker 2: matters as well. So what's kind of your assumption for that,
Speaker 2: what countries will get hit first, and how long maybe
Speaker 2: will we wait for other countries to get hit?
Speaker 3: Yeah, I think if we follow you know what Trump
Speaker 3: is saying on his social accounts, China, Mexico, and Canada
Speaker 3: seem to be in the front in terms of the
Speaker 3: firing line. So our assumption specifically within the Asia region
Speaker 3: is the China tariffs, you know, ramping it up to
Speaker 3: sixty percent, that gets implemented in the first quarter, in
Speaker 3: the first half of this year itself, and then essentially
Speaker 3: the gradual ramp up on the rest of the world
Speaker 3: takes place over the course of twenty twenty five. But
Speaker 3: some of these other countries that are in the cross
Speaker 3: firing line because of trade diversion, as you said, I
Speaker 3: think it's going to take a bit more time to
Speaker 3: conduct studies and analysis, so their tariffs it could take
Speaker 3: a bit more time to come through. Also, there is
Speaker 3: uncertainty all said and done. I mean to the extent
Speaker 3: that you know, Trump is using threats on other countries
Speaker 3: more as a negotiating ploy to get them to increase
Speaker 3: their defense spending or to get them to buy more
Speaker 3: US energy products. There could be specific cases is where
Speaker 3: you don't see actually the kind of tart of implementation
Speaker 3: that he's threatening on a few countries. So I think
Speaker 3: we're dealing with very elevated levels of uncertainty. But that said,
Speaker 3: I think the baseline objective that he has to be
Speaker 3: taken very seriously in our few.
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Speaker 1: now you're the head economist for Nomura based in Singapore,
Speaker 1: and you look at across the Asia Pacific region if
Speaker 1: you had to sort of do a simplistic ranking, so
Speaker 1: obviously China's going to be the most impacted. I'm assuming
Speaker 1: that some of the other open economies that rely on
Speaker 1: exports are also going to be negatively impacted. But who
Speaker 1: are the relative winners? Can you sort of give us
Speaker 1: some ranking of which economies should do relatively well versus
Speaker 1: relatively badly?
Speaker 3: Yeah? Sure, so I think we need to think about
Speaker 3: this both in terms of like the near term impact,
Speaker 3: but also sort of the medium term impact. If you
Speaker 3: think about the near term impact, the higher tariffs, more uncertainty,
Speaker 3: weaker global demand, weaker exports, that's pretty negative for the
Speaker 3: open economies in the region. So the likes of South Korea, Singapore,
Speaker 3: you know, these will be impacted more negatively just because
Speaker 3: they are open economies. But from a more medium term perspective,
Speaker 3: I think there are two trends that are important. One
Speaker 3: is really the rise of DM industrial policies, so you know,
Speaker 3: us trying to get semiconductor supply chain back or trying
Speaker 3: to get the you know, EV supply chain back, and
Speaker 3: this is not just US obviously, you know you're seeing
Speaker 3: the rise of industrial policies even in Europe. And the
Speaker 3: second trend is really the rise of China in the
Speaker 3: manufacturing supply chain. And China has moved up the value
Speaker 3: chain and today is you know, a global leader in
Speaker 3: some of the high tech manufacturing likes of evs. So
Speaker 3: some of the countries like South Korea, I would say,
Speaker 3: in particular, I think the question is, you know, the
Speaker 3: business model, the growth model going forward, because you know,
Speaker 3: these are these sectors in which Korea has done exceedingly well,
Speaker 3: but there is now this threat coming through both from
Speaker 3: the US industrial policies but also the rise of China.
Speaker 3: In terms of the winners from this trade tensions, I
Speaker 3: think the countries which are receiving a lot more of
Speaker 3: funding from non China destinations and which are competing more
Speaker 3: in the low tech to mid tech manufacturing which is
Speaker 3: not at risk necessarily from US industrial policies, other ones
Speaker 3: that should be relative beneficiaries. Again, the winners, you know,
Speaker 3: from a near term will be countries that are more
Speaker 3: domestic demand driven, and again I would put India in
Speaker 3: that bucket. India is also a strategy counterweight to China,
Speaker 3: you know when it comes to US policies, and Malaysia,
Speaker 3: which we also think is actually seeing a lot of
Speaker 3: benefits from the shift in supply chains that are ongoing
Speaker 3: right now. So we think Indian Malaysia will be the
Speaker 3: two big winners this time around.
Speaker 2: We've talked about a lot of Southeast Asian countries here,
Speaker 2: and how do you think they'll react Because we'll probably
Speaker 2: have US tariffs on Chinese goods, will probably have China
Speaker 2: offsetting and re routing those exports. How would we to
Speaker 2: Southeast Asia, So what are the risks there and how
Speaker 2: do they kind of manage that relationship.
Speaker 3: Yeah, no, absolutely, as you said, you know, and I
Speaker 3: would say this trend of increased China exports to rest
Speaker 3: of Asia is a trend that has really accelerated post
Speaker 3: the pandemic because of the weakness in China's own demands.
Speaker 3: So Asia is definitely seeing a lot of the channel
Speaker 3: over capacity ongoing. And you know what's interesting is that
Speaker 3: this is actually visible across a range of product categories.
Speaker 3: So whether it's sort of the low cost products with
Speaker 3: you know, through the e commerce platforms, metals, chemicals, autos,
Speaker 3: even capital goods and intermediate products of course, you know,
Speaker 3: across countries. So this is actually across the board. And
Speaker 3: as you said, with the Trump tariffs, we are likely
Speaker 3: to see in our view, redirection of these exports into
Speaker 3: the rest of the region. So it does complicate actually
Speaker 3: the economic picture for these countries because there's a surge
Speaker 3: and imports, the trade imbalances are worsening. There's a negative
Speaker 3: impact on production factories, kpex is getting impacted, the semi
Speaker 3: sector is you know under pressure, profitabilities under pressure, and
Speaker 3: you know, job creation is becoming a challenge, So a
Speaker 3: whole host of challenges that these countries are facing. And
Speaker 3: in fact, you know, in response to this, we've also
Speaker 3: seen some change in how some of these Asian countries
Speaker 3: have responded to the threat of more imports from China.
Speaker 3: I would say, a more subtle form of a rise
Speaker 3: in Asian protectionism, in fact, in the form of things
Speaker 3: like increasing the vat on low cost products or banning
Speaker 3: some of the e commerce apps for instance Timu and
Speaker 3: Shean exactly. There have been also changes in the incentive
Speaker 3: struct which I think is important for these countries in
Speaker 3: terms of putting policies in place such that there is
Speaker 3: less reliance on imports and more reliance on local value
Speaker 3: edition that comes in because of these, you know, so
Speaker 3: more investment from China rather than imports from China. So
Speaker 3: all of this is going on, and as you said,
Speaker 3: with US status, this is going to be a bigger challenge.
Speaker 3: But the end, at the end of the day, you know,
Speaker 3: Asia and Southeast Asia in particular has to balance its
Speaker 3: relationship with China, both for geopolitical as well as an
Speaker 3: economic reason. I mean economically, China and Southeast Asia have
Speaker 3: a very strong investment and trade relationship. A lot of
Speaker 3: the investment in infrastructure factories today in Southeast Asia is
Speaker 3: coming from China. And you know, as we were discussing,
Speaker 3: China is extremely important in the supply chains. So if
Speaker 3: you want to benefit from the supply chain shifts, your
Speaker 3: intermediate products are still coming from China. And I mean geopolitically,
Speaker 3: I think the you know, question really for countries is
Speaker 3: how reliable will US be as a defender of regional security?
Speaker 3: And there are question marks on this and so all
Speaker 3: said and done, I think for Asia and for Southeast Asia,
Speaker 3: it's all about you know, balance and you know, managing
Speaker 3: both US and China, which is you know, not easy.
Speaker 2: It must squeezed between two of the world's largest economies.
Speaker 1: There must be a real hard balancing act because like
Speaker 1: you look at something like electric vehicles are evs. Now,
Speaker 1: there's a flood of EV's going into Southeast Asia. I
Speaker 1: know you're based in Singapore, I know that there's a
Speaker 1: lot more Chinese EV's on the road there. But you
Speaker 1: have a place like Thailand. They've got a big car
Speaker 1: manufacturing industry and you're seeing they're being impacted by these
Speaker 1: Chinese imports.
Speaker 3: Absolutely, And in fact, you know, Japanese firms were actually
Speaker 3: the first ones to invest in Thailand in the plans, etc.
Speaker 3: And we've seen a couple of Japanese auto plants actually
Speaker 3: shut down because of the rise in the ev were
Speaker 3: seeing from China. It's tricky and in my view, a
Speaker 3: lot of these countries in Asia still I would say
Speaker 3: developing countries, right, I mean, they need to create jobs,
Speaker 3: they need to create growth. They're not at that stage
Speaker 3: of economic development where they can directly compete on high
Speaker 3: end semiconductor. Therefore, it's important for them to put policies
Speaker 3: in place such that there is more domestic value addition
Speaker 3: that comes in that for whichever product category that they're
Speaker 3: focusing on, that they create an ecosystem in place. And
Speaker 3: this requires different kinds of reforms. I mean some of
Speaker 3: the you know, basic stuff in terms of better infrastructure,
Speaker 3: better ease of doing business is where you start off with.
Speaker 3: But over a period of time, you know, you need
Speaker 3: to invest in innovation, in R and D and education skilling,
Speaker 3: so a lot of work homework actually that these governments
Speaker 3: also need to do to ensure they have a more
Speaker 3: sustainable growth over time.
Speaker 1: So now I love to bring the conversation to India. Now,
Speaker 1: India has been the one shining light, one shining you know,
Speaker 1: great economy over the last few years. Obviously China has
Speaker 1: been weeks, a lot of investors have been focusing on India.
Speaker 1: But recently we noticed that the authorities downgraded their economic forecast.
Speaker 1: Now we used to like eight percent GDP growth handle
Speaker 1: for India. Now it looks like it's been downgraded closer
Speaker 1: to sort of six percent. What's your view? Should we
Speaker 1: be getting worried here? So?
Speaker 3: I mean, I would say, like in there facing a
Speaker 3: cyclical growth challenge and the twenty twenty five is going
Speaker 3: to be a difficultier on growth, but I don't think
Speaker 3: it's a structural growth challenge, So I would differentiate the
Speaker 3: two things. So what's happening really is post pandemic. You know,
Speaker 3: we did see, as you said, close to eight person
Speaker 3: growth on average, but a lot of that was actually
Speaker 3: pent up demand, which has essentially normalized. And we've seen
Speaker 3: some moderation in urban income growth. The huge increase in
Speaker 3: credit growth, particularly for consumers, that is slowing down, partly
Speaker 3: because of the macroprudential tightening that the Reserve Bank of
Speaker 3: India has implemented mountropolicies. On the tighter side, India is
Speaker 3: also facing the threat of more imports coming in from China.
Speaker 3: So you put all of that together and essentially we've
Speaker 3: seen slow down in private consumption and a slow down
Speaker 3: in private investments. So twenty twenty five will be difficult
Speaker 3: on growth. You know, the trend growth in India is
Speaker 3: somewhere around the seven percent six and a half to
Speaker 3: seven percent in that range. So this year we think
Speaker 3: is going to be a of below trend growth and
Speaker 3: like the rest of Asia, and there is also seeing
Speaker 3: pressure on the currency, so that's creating challenges on the
Speaker 3: MOUNTRA policy front. The reason I say this is not
Speaker 3: structural is because unlike the period from twenty eleven to
Speaker 3: twenty twenty, balance sheets are actually in a much better shape,
Speaker 3: both in terms of corporate balance sheets as well as
Speaker 3: the balance sheet of the banking system. As we discussed,
Speaker 3: you know, India is already benefiting on the supply chains.
Speaker 3: This is right now fairly focused on smartphones, but this
Speaker 3: is how it typically starts, and the focus from the
Speaker 3: government site in terms of policies and reforms is to
Speaker 3: integrate even more on the global supply chain. There's a
Speaker 3: lot of spending on infrastructure that's going on and will
Speaker 3: continue going forward. Working age population is increasing, household incomes
Speaker 3: are going to increase, the middle income classes rising, and
Speaker 3: India has you know, historically had a big advantage in services,
Speaker 3: not in manufacturing, but in services, particularly in technology. In
Speaker 3: the last four or five years, we've actually seen this
Speaker 3: benefit actually spread out outside it to the non IT
Speaker 3: services as well, what we call these new global capability
Speaker 3: centers which are cropping up. So India is benefiting from
Speaker 3: you know, things like R and D strategy consulting which
Speaker 3: are being set up. So I think there are still
Speaker 3: a lot of opportunities. Yes, a lot of challenges in
Speaker 3: terms of trying to grow in a global environment where
Speaker 3: countries are becoming a lot more protectionist, so it's more
Speaker 3: challenging in their needs to create more jobs. But I
Speaker 3: think the fundamentals are in place. So it's a tough year,
Speaker 3: but growth will bounce back. Well.
Speaker 2: Maybe good to end on that more optimistic note. Thank
Speaker 2: you for joining us so much today.
Speaker 3: So no, thank you very much for having me.
Speaker 2: You've been listening to Asia Centric from Bloomberg Intelligence. I'm
Speaker 2: Katy Dmitrieva. You can find me on Twitter at Katia
Speaker 2: Dmi or on LinkedIn.
Speaker 1: And I'm John Lee and you can find me on
Speaker 1: LinkedIn by searching John Lee from Bloomberg Intelligence.
Speaker 2: This podcast was produced by Clara Chen and you can
Speaker 2: find this podcast on Spotify, Apple Podcasts, or wherever you
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