Asia is likely to witness dramatic changes over the next few years and India may be the 'real sleeper' — the one who becomes suddenly successful after being undistinguished — even as China is grabbing the centre-stage in the region, says the Morgan Stanley Asia Head.
"I think that India actually could be the real sleeper in Asia over the next few years. Just at a time when everybody is all lathered up and excited over a China-centric region," Stephen Roach said.
A large presence of world-class competitive companies, English-speaking, IT-competent workforce, relatively stable financial institutions, are some of the factors that may drive growth in the country.
In the last three to four years, India's savings rates have moved, though at a lesser pace than China but still an improvement in itself.
"Foreign direct investments accelerated dramatically again, not up to Chinese standards, but a huge acceleration vis-a-vis where India has been historically," Roach said in an interview with the Mckinsey publishing group.
Moreover, the mid-May election had given reformers an opportunity to deliver on promises they made, when they first took power over five years ago, Roach said.
Roach said Asia should concentrate on domestic consumption and embrace environmentally sustainable development policies to maintain its robust growth rate at a time when global demand is declining.
In the past Asia was an export driven economy, but in the coming years it will be a consumer-led economy, and global multinationals would like to tap the 3.5 billion customers in the region.
In order to keep growing and to keep developing, Asia has to depend more on its own internal demand and "become more internally, rather than externally, dependent", Roach said.
He said a greater degree of co-operation and integration within Asia and a China-centric supply chain has emerged, with most of the large economies in the region — Japan, Korea and, Taiwan — now being more dependent on exports to China than any of their other major trading partners, including Europe or the United States.
However, it is s little early to say that the "Asian Century" has arrived.
"Asian Century, in my view, is not a sustainable image if it’s an Asia of producers or exporters selling things to others. The Asian Century is one where Asia produces to its home markets, rather than just to markets around the world," Roach said.
