India’s $4 trillion economy dream fades amid structural slowdown: UBS
New Delhi: India’s dream to become the world’s third-largest economy, valued at $4-5 trillion, is slipping away.
According to UBS, a multinational investment bank and financial services company headquartered in Zurich, Switzerland, the country’s economy has entered a structural slowdown, driven by a long-term decline in credit growth, foreign direct investment, export competitiveness, and earnings potential.
This slowdown is not just a cyclical phenomenon, but a deeper structural issue. UBS recommends that investors short India’s rupee and go underweight on the country’s stocks. The bank’s research group notes that India’s growth is vulnerable to external risks, particularly rising US Treasury yields.
The Indian rupee has fallen to record lows against the US dollar, and the country’s bonds are experiencing rapid outflows. The Reserve Bank of India faces a challenging decision on whether to cut interest rates, as monetary easing may erode rupee carry and hot money capital flows.
The current slowdown raises concerns about the country’s ability to achieve the desired goal.
