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The $10 Trillion Bet

The Organization for Economic Cooperation and Development (OECD) released a new report predicting that the economy of China will rebound and grow 8.5% in 2013 and 8.9% in 2014

Daniel Lorenzzo

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Just yesterday, the Organization for Economic Cooperation and Development (OECD) released a new report predicting that the economy of China will rebound and grow 8.5% in 2013 and 8.9% in 2014, citing increasing domestic consumer demand and government spending on housing and infrastructure as the tailwinds behind this renewed surge.

When it comes to China and India, we at The Boston Consulting Group (BCG) urge you to bet in favor of both.

China India tiled Flags

Annual consumer spending in India and China combined will therefore reach $10 trillion by 2020.

 

According to The Wall Street Journal, the OECD report attributed China’s slightly less robust 7.5% growth rate this year to a slowdown in exports and the government’s intervention to stave off inflation and rein in property prices. The OECD report also expressed optimism that India’s economy will resume growth over the next two years, indicating that its currency will likely be shored up soon and that its current-account deficit issues will be stabilized, too.

Given recent blips in both countries’ economies, many prognosticators have sounded dire alarms, urging caution for Western companies pondering their future initiatives in China or India. In our new book, The $10 Trillion Prize: Captivating the Newly Affluent in China and India, we posit that growth in China and India will not occur along a straight line, and both countries will have to overcome corruption, imprudent investments, social disharmony, pollution, natural disasters, and political conflict.

Annual consumer spending in India and China combined will therefore reach $10 trillion by 2020.

But our book’s primary thesis — and one that we continue to maintain — is that the economies of China and India will continue to grow at a compound annual growth rate of at least 8% through the end of the decade, and that annual consumer spending in the two countries combined will therefore reach $10 trillion by 2020.

A $10 Trillion Bet on China and India – Michael J. Silverstein – Harvard Business Review

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