India’s economy could prove to be the “most resilient” in the sub-region of south and southwest Asia over the long term, a United Nations’ body said in a report released on Tuesday.
The “Foreign Direct Investment Trends And Outlook In Asia And The Pacific 2020/2021” report compiled by the United Nations Economic and Social Commission for Asia and the Pacific, however, suggested that south and southwest Asia, the sub-region under which India falls, will record the worst contraction in trade this year due to the coronavirus pandemic.
The report noted the inflow of foreign direct investment in India, as it accounted for 77% of the total such fund received by the sub-region in 2019. It mentioned India’s recent policies of relaxing FDI rules in the insurance, coal and defence sectors as the reason for the uptick in foreign investments.
“India’s economy could prove the most resilient in the sub-region over the long term,” the report said. “FDI inflows have been steadily increasing and positive, albeit lower, economic growth after the pandemic and India’s large market will continue to attract market-seeking investment.”
India’s fast-growing telecom and digital space, in particular, could see a faster rebound as global venture capital firms and technology companies continue to show interest in the country’s market through acquisitions, the report said, citing investments made by technology companies Google and Facebook in Reliance’s Jio platforms.
However, as far as trade in 2020 is concerned, the report said that imports to India were hit the hardest in the sub-region, declining by 23.6%, as compared to the last year. It also listed the decline in India’s Gross Domestic Product growth as a reason for dip in domestic spending levels in the entire Asia-Pacific region. India’s economy contracted by 7.5% in the second quarter (July-September), after shrinking by an unprecedented 23.9% in the first three month period (April-June) of this financial year.