Professor, National Institute of Opening-up, university of international business and economics, Li Changan
In recent days, there has been a blowout outbreak of COVID-19, with more than 3, new cases for several days, and the epidemic is almost out of control. What is worrying is that the epidemic in India is far from the turning point, and the surge in cases is likely to continue. In response to the epidemic, many places in India have implemented strict city closure measures. At the same time, some countries, such as the United States, Britain, Canada, Australia and France, have pressed the "pause button" for flights from India. The Indian epidemic has not only had a serious impact on India's own economy, but also brought a big impact on the global economy.
As a developing country whose population is second only to that of China, India has made great achievements in economic development in recent years. In the last decade, India's average annual economic growth rate has reached 7.5%, which is very eye-catching. Not long ago, the World Economic Outlook Report released by the International Monetary Fund also raised India's economic growth forecast to 12.5% in 221. Today, it is not easy for India to achieve this goal. The most affected by the epidemic is small and medium-sized enterprises. According to statistics, the total number of employees of small and medium-sized enterprises in India reaches 11 million, which is the second largest employment sector after agriculture, contributing 3% of GDP and 4% of exports. Obviously, the second wave of epidemic is bringing a new blockade, and the longer it takes, the greater the losses of small and medium-sized enterprises.
The outbreak of the epidemic in India will obviously make foreign investors wait and see. More importantly, it will also have a big impact on the global value chain and supply chain. At present, India ranks among the top ten countries in the world in terms of import and export trade volume, of which the total foreign trade volume reached US$ 88 billion in 219, which declined in 22 due to the epidemic. In terms of national trade, China will become India's largest trading partner again in 22, with a two-way trade volume of US$ 77.7 billion, of which the total import from China is US$ 58.7 billion. The United States is India's second largest trading partner with a bilateral trade volume of $75.9 billion.
from the perspective of industrial chain supply chain, Indian industrial chain is not as complete as China's, but it can also be called a "resource power" and "manufacturing power". Its main export products include petroleum products, diamonds, medicines, precious metal jewelry and parts, manned motor vehicles, etc. Its import products include petroleum crude oil, gold, coal and solid fuel, diamonds, liquefied petroleum gas, etc. India is rich in mineral resources such as coal, iron ore, chromite, bauxite, mica and gypsum. Natural graphite and rare earth metals also have large reserves, ranking the top five in the world. In addition, India is the third largest oil consumer in the world. Due to its blockade policy, the market is worried that crude oil futures prices will fluctuate.
In recent years, some international technology giants such as Apple have set up factories in India, and Tesla also intends to set up new factories in India. Take Apple as an example. In 22, its business in India achieved a year-on-year growth of more than 6%, and in the last quarter, the year-on-year growth reached an astonishing 1%. However, after the implementation of strict city closure measures, most enterprises are forced to close their factories, which will have a certain impact on the global supply chain. Relevant institutions predict that India's mobile phone shipments will plummet in the second quarter of 221 and will continue to have an impact in the next two or three quarters. Take the pharmaceutical industry as an example. Apart from the United States, India and China are the two largest markets for the supply of raw materials in the world, which together account for about 21% of the global industrial chain. If the Indian epidemic leads to the shortage of raw materials in India, the prices of related drugs may also rise. India is also a big producer of vaccines. Due to the re-outbreak of the epidemic, the export plan of vaccines may be blocked, and priority will be given to meeting the epidemic prevention needs of the country.
In addition, the huge population will increase the demand for food products in India. In fact, global food prices have responded to the Indian epidemic. Global food prices continue to rise. According to the data of the Chicago Board of Trade, the prices of major crops such as wheat, soybeans and corn have risen to the highest level in the last eight years.