Why Key Is A Winner - India Set To Bowl US

Max Bowden's BusinessSense: Why Key Is A Winner - India Set To Bowl US

John Key has been a man on a mission in the past week. A crucial mission for NZ. His India visit could result in a Free Trade Agreement.

In the modern globalised world, these treaties are vital. The Doha World Trade talks have been stalled for years - the prospects of multi lateral agreement to open trade doors are fading.

India is already a nuclear power. It has a growing middle class, and it will be demanding the sort of basic commodities NZ produces so well, along with our agricultural technologies.

It is also set to be a new trade powerhouse. We know it is big, but some recent predictions from Citi show the sub-continent is about to emerge as a giant, despite all its social problems. The Main Report Business Week www.themainreport.co.nz had the details.

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"India To Overtake US In Trade

A new report by Citi predicts in less than 40 years India will overtake the US as the world’s second-largest trading nation, pushing today's superpower into third place and Europe in to the little leagues. The finding makes NZ negotiations for an India FTA even more critical.

Citi says world trade in goods and services will grow from $US37 trillion in 2010 to $US149 trillion in 2030 and $US371 trillion in 2050, with emerging markets gaining much more significance.

The report predicts trade between emerging markets will overtake that between advanced economies in just four years in a clear sign the world’s major economies of Europe and North America are set to lose relative importance to the global economy.

Developing Asia made up 24% of world trade in 2010, but its share is expected to reach 42% by 2030 and 46% by 2050. The report says Europe and North America’s importance to global trade will ebb over the next four years. China is expected by Citi to become the world’s biggest trader by 2015 but it is India’s rise which will surprise many people.

The report says India, which does not even feature in the top 10 of the world’s largest traders in 2010, is expected to be the world’s second-largest trader by 2050, with the US in third place."

Since the China FTA NZ's trade focus has started to change away from the traditional anglo saxon markets. India is a good bet for NZ because despite its seemingly alien culture, it has a strong "English" heritage, left over from the days of the Raj.

But one of the biggest problems NZ exporters may find there is corruption. An Economist report on the issue earlier this year says corruption is worse in India than in other countries, because in most places when a bribe is paid, there's a high chance of a successful outcome. In India, this is not always the case, and this uncertainty worries business.

ENDS

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