CEE Oct-Dec 2012

The annual ranking, titled 'Economi c Freedom of the World: 2012', is topped by Hong Kong , followed by Singapore, New Zealand , Switzerland (8.24) and Australia in the top five. The index has been prepared by Canada– based public policy think-tank, Fraser Institute, in cooperati on with independent institutes in 90 nations and territories, and claims to measure the degree to which the policies and institutions of countries support economic freedom. India's ranking has fallen from 103'd last year, while Hong Kong has retained its top slot, the report said. Canada is ranked sixth on the list, while others in the top-ten include Bahrain, Mauritius, Finland and Chile. The countries with lowest level of economic freedom are - Myanmar, Zimbabwe, Republic of Congo and Angola . India shares its 111th position with two other countri es, Iran and Pakistan, while those ranked lower include Guyana, Syria and Nigeria. India has scored an overall rating of 6.26 in the economic freedom index as against an average global score of 6.83. In the economi c freedom index, China is at 1oih position with a score of 6.35, Bangladesh at 109th with a score of 6.34 and Nepal is at 110th position (6.33). Hong Kong offered the highest level of economic freedom worldwide. Courtesy: The Financial Express New Delhi, 26.09.2012. ADB LOWERS 2012-13 GROWTH PROJECTIONS FOR INDIA, CHINA Weakening growth momentum in China and India is proving to be a drag on the rest of Asia as the two giants have emerged as important sources of export demand for other economies in the region , the Asian Development Bank said in an update to its Asian Development Outlook. ADB on 3. 10.2012 lowered its growth projections for India and China to 5.6 per cent and 7.7 per cent respectively, for 2012 -13, from its earlier projection of 7 per cent and 9.3 per cent. In 2013- 14, growth is expected to recover to 6.7 per cent in India and 8. 1 per cent in China, it said. ADB said Chi na and India produce growing shares of world gross domestic product (GOP) and have become more integrated into international trade. "As this trend continues, economic activity in the two Asian giants wi ll shape regional and international business cycles," the report said. India's imports from the Association of Southeast Asian Nations (ASEAN) region grew 39 per cent in 2011 - 12 and exports gained 43 per cent. Total exports grew 21.8 per cent and imports 32 per cent that year. Biswajit Dhar, Director General at Research and Information System for Developing Countries however, said that "whil e a slowdown in China has a larger impact on ASEAN region, India is yet to have any significant impact on their growth momentum". ADB said India's trade with the major industrial economies in Asia and China are modest slices of a small pie. India's exports to the US and Europe averaged less than 2 per cent of its GOP in the 2000s. Exports to Japan averaged only 0.3 per cent of GOP and to China 0.6 per cent. "These minuscule contributions to India's GOP explain the relatively negligibl e spillovers into India from shocks in any of the major industrial economies or China," it said. Though India's exports to Asia constitute more than half of its total exports, it needs to integrate more with ASEAN economies to benefit from their production network, Dhar said. ADB said that although external shocks had some bearing on GOP volatility in India, domestic shocks accounted for 75 per cent of the vari ation in output. In China, internal shocks were less dominant but still accounted for more than 40 per cent of such variation. Though India is hardly affected by external events, its growth prospects affect other countries, ADB said. The three major industrial economies or groupings in the region-Japan, ASEAN and China-all suffer GOP declines roughly one-fourth the size of the ori gi nal decline in India's GOP. A 1 per cen t decline in China's GOP leads to nearly a 1 per cent decline in growth in the ASEAN region, it said. ADB noted that the degree to which domestic factors drive GOP fluctuations in the two giant economies "hints at the need for economic reform". The report blamed subdued investments, waning consumer confidence and deficient monsoon for lowering its outlook of India's growth prospects. "Tepid consumption has been insufficient to make up for declining investment and export demand. A large fi scal deficit and persistently high inflation have limited the scope for fiscal and monetary policy to stimulate the economy," it said. 50 ' /