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The eastern hemisphere is growing at a rate much faster than the western hemisphere, with China recently announcing GDP growth at 7.7% (compared to U.S estimates of 2-3%), but just who exactly will be the powerhouse in the east over the next 20 years?
China's reining position as the world's most populous country is projected to come to an end by 2025, when rapidly growing India's population is expected to surpass that of China's. While demographic professionals have long been aware of this looming shift, projections have moved the date for the expected shift earlier.
In 2009, The U.S. Census Bureau released population estimations for 21 countries, in which it determined that China's population is projected to peak at slightly less than 1.4 billion people in 2026, and that India's population will surpass that of China's in 2025. As of 2012, the World Population Data sheet [pdf] estimates China's population at 1.35 billion and India's at 1.26 billion.
China's population growth rate has been declining for many years due to declining fertility. The country's total fertility rate-the number of births a women is expected to have in her lifetime-was estimated at 2.2 in 1990, 1.8 in 1995, and less than 1.6 since 2000. The country's population growth rate stands at 0.5 percent annually.
India's population growth rate is estimated at about 1.4 percent, nearly three times that of China. India's total fertility rate is estimated at a current 2.7, but is projected to decline slowly.
The Census Bureau data also estimates that new entrants into China's labor force may be near its peak, as the population of Chinese 20- to 24-year-olds is projected to peak at 124 million this year. India's population of 20- to 24-year-olds is not expected to peak until 2024, when it hits 116 million.
Despite China's shrinking younger population, its labor force may continue to grow for a few more years, as the population that includes ages 20 to 59 is not expected to peak until 2016, when it is projected to reach 831 million, an increase of 24 million over the current level.
Given that China and India together account for 37 percent of the world's population, their demographic trends have major implications for worldwide population change," noted the Census Bureau in releasing its revised figures. Population changes also hold inherent major economic implications. "These changes in China's age structure may affect its economic growth and competitiveness in the world market.
The aforementioned statistics provide support for Our contrarian belief that democratic India will emerge as the economic powerhouse of Asia, as opposed to autocratic China. Ultimately, We personally believe that India will take over as the most powerful economy is the east within the next two decades. We also believe that India holds far more promise than China as a long-term investment, especially given how rapid and high up China's economy has climbed in the past decade.
Some potential options for investors looking to capitalize on this demographic shift are WisdomTree India Earnings Fund ETF (EPI), which is a fundamentally weighted index that is comprised of companies incorporated and traded in India that are profitable and that are eligible to be purchased by foreign investors.
Conclusion!!!!
With birthday rates already tripling that of the Chinese, and a labor force that is much younger, We whole-heartedly believe that in the coming decades India will become the new economic powerhouse in the east. Investors looking to capitalize on this growing economy should consider the ETFs mentioned above, as well as many other traded funds that mimic the Indian markets.
It's not a matter of "if" it will happen, just a matter of "when."
India today exuded confidence that global agencies will upgrade the country's sovereign rating in the backdrop of bold and tough decisions taken by government to contain fiscal deficit and promote growth.
Talking to reporters after meeting a with representatives of rating agency Standard and Poor's, Economic Affairs Secretary Arvind Mayaram said there was no case of rating downgrading as the government has taken bold and tough decisions, like reducing subsidies on petroleum products.
"I think there is a case for an upgrade because we have taken the kind of decisions that most of countries in the world have not been able to take. This country has shown its determination to put the economy back on track. We believe it will happen and there is no doubt about it," he said.
Mayaram said 36 per cent of total subsidies globally on petroleum products is given by developed countries, while India has started phasing out such subsidies.
He said the S&P representatives were informed that government was resolved to check fiscal deficit and speed up mega projects, including by the Cabinet Committee on Infrastructure. CCI has cleared projects worth billions of dollars in the recent weeks.
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