Furthermore, while India’s current account deficit has widened, the government should be able to manage it, and the widening of the current account deficit can be partly explained by rising domestic demand or import demand, which may signal growth opportunities and draw foreign investments under the circumstances, supporting the balance of payments.
“Looking ahead, we believe India’s economic growth remains on a recovery path. We see signs of a GDP growth recovery after the recent softening trend tied to the disruptive effect of one-off events, such as demonetization and the implementation of the GST. Recent high-frequency indicators have confirmed a pickup in growth momentum, led by an acceleration in consumption growth, and with a notable improvement in industrial production,” Rajah added.
Investors who are interested in gaining exposure to a potential emerging growth opportunity may look to country-specific ETFs. For example, the Franklin FTSE India ETF (NYSEArca: FLIN) reflects the performance of the FTSE India Capped Index, a market-capitalization weighted index representing the performance of Indian large- and mid-capitalization stocks.
For more information on the developing economies, visit our emerging markets category.