Manufacturing investment? India set to be No. 1! – KPMG survey

Manufacturing workIndia: India is likely to see the largest growth in its share of foreign investment overall, and should become the world leader for investment in manufacturing, says a recent KPMG survey.

The results showed a move away from investments in the United States, Japan, Singapore and the United Arab Emirates, and a big increase in flows to Brazil, Russia, China and India (BRIC).

A global survey of corporate investment plans was carried out by KPMG International. Corporate investment strategists from over 300 of the largest multinational companies in 15 major economies were asked where they plan to invest in the next 12 months and in five years’ time.

This trend-setting survey suggests a major shift of capital flows from the USA, Japan and other European countries to the BRIC (Brazil, Russia, India and China) countries, in the next five years.

Significantly, while 10 per cent of the companies surveyed expect to invest in India currently, that number will go up to 18 per cent in five years — the biggest gain amongst all other BRIC countries.

Further an increasing proportion of investments will flow into industrial products and manufacturing in India. Interestingly, 64 per cent of the investment into India is expected to come from new entrants to the country.

India, according to the survey, has the potential to play an even more influential role in flow of capital and it’s a great opportunity for India to further improve the economic and fiscal climate and attract and retain investments in its growing economy.

So which countries, according to the survey, will become economic superpowers soon?

China: China is expected to overtake the US as the world’s leading recipient of corporate investment in the next five years, and should become the most influential country in IT and telecoms, industrial products and mining, a new study of future global capital flows has found.

But the European economies are expected to keep their attraction for investors, with the UK maintaining a very strong position, especially in financial services.

China should receive significant investments from 24 per cent of corporates surveyed in 2013/14, up from 17 per cent this year.

Brazil: Brazil is the world’s 10th largest economy at market exchange rates and the ninth largest in purchasing power.

in the next five to 10 years, Brazil is going to see a significant increase in investment in manufacturing.

Economic reforms have transformed it into an emerging great power; founding member of the United Nations and the Union of South American Nations.

Brazil is home to a diversity of wildlife, natural environments, and extensive natural resources in a variety of protected habitats.

Russia: Since the turn of the century, rising oil prices, increased foreign investment, higher domestic consumption and greater political stability have bolstered economic growth in Russia.

In fact, this encouraging growth will result in sharp increase in investment in the country’s manufacturing sector in recent future.

The country ended 2007 with its ninth straight year of growth, averaging 7 per cent annually since the financial crisis of 1998.

In 2007, Russia’s GDP was $2.076 trillion.

Growth was mainly driven by non-traded services and goods for the domestic market, as opposed to oil or mineral extraction and exports.

USA: US share of investments in manufacturing, acccording to the KPMG survey, is expected to fall by 4 per cent to 23 per cent in recent future.

The US is also expected to give up its dominance of the mining, industrial products and IT/telecoms sectors, with China taking first place in each case.

The US economy is the largest national economy in the world, with a nominal 2006 gross domestic product of more than $13 trillion.

Japan: Japan’s share of investments in manufacturing, acccording to the KPMG survey, is expected to fall significantly in recent future.

The country also expected to give up its dominance of industrial products and IT/telecoms sectors, with China taking first place in each case.

In the early 1960, Japan achieved spectacular growth to become the second largest economy in the world, with an annual growth rate averaging 10 per cent for four decades.

This ended in the mid-1990s when Japan suffered a major recession. Positive growth in the early twenty-first century has signaled a gradual recovery.

The United Arab Emirates: UAE’s share of investments in manufacturing, acccording to the KPMG survey, is expected to fall remarkably in recent future.

In the next five to 10 years, the focus of investement will shift from UAE to Brazil, Russia, India and China.

The UAE has a highly industrialised economy that makes the country one of the most developed in the world, based on various socioeconomic indicators like GDP per capita, energy consumption per capita, and the human development index.

The UAE’s GDP per capita is currently the 5th in the world and 3rd in West Asia after Qatar and Kuwait as measured by the CIA World Factbook.

Singapore: Singapore’s share of investments in manufacturing, acccording to the KPMG survey, is also expected to fall by over 6 per cent in recent future.

This is quite surprising as Singapore has a successful and transparent market economy.

The country’s government-linked companies are dominant in various sectors of the local economy, such as media, utilities and public transport.

Singapore has consistently been rated as the least corrupt country in Asia and among the world’s 10 most free from corruption country by Transparency International.

Courtesy :- Rediff

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