The global economic downturn has not left the emerging countries unscathed with India and China witnessing moderation in their economic growths, but experts believe the two countries are holding on relatively well among other developing nations.
According to a latest report by leading brokerage firm Sharekhan, "Asian emerging markets too are facing their own share of economic moderation owing to weakness in external trade, foreign inflows and economic sentiment. Importantly, India is holding on well, though the GDP growth has moderated to 5.3 per cent year-on-year (for Q3FY2009) compared with 7.6 per cent in Q2FY2009."
Experts believe that though the fastest-growing economies of China and India have suffered some moderation, they are showing much more endurance than the other two countries in the BRIC pack -- Brazil and Russia.
"Among the BRIC countries, India and China are relatively showing resilience as they are still reflecting GDP growth rates as high as six per cent to eight per cent," SMC Capitals equity head Jagannadham Thunuguntla said.
Angel Broking Research Head Hitesh Agrawal also believes that India and China are relatively well-placed compared with Brazil and Russia, evident from the contractions witnessed in the latter two over the last six-eight quarters.
India's GDP growth has contracted from a quarterly peak of 9.7 per cent in the fourth quarter of 2006-07 to 5.3 per cent in the third quarter of the current fiscal, pulled down by decline in manufacturing and farm production.
China's GDP growth has shrunk from a record of 12.6 per cent to 6.8 per cent in the fourth quarter of 2008.
"In the case of Brazil, its GDP growth has come down from 6.5 per cent to 1.3 per cent, and as far as Russia is concerned, its economic growth is expected to slow down from over 9.5 per cent to 2-3 per cent in the December 2008 quarter," Agrawal said.
The primary reason for the under-performance of Brazil and Russia is their high dependence on commodities (metals and oil), whose prices have come down over the last nine months in particular, he added.
The Sharekhan report further stated that in terms of current account deficit as well, India is well-placed compared with its Asian emerging peers.
Similarly, the short-term external debt position of the country is still within reasonable limits with enough forex reserves to meet such obligations.