As the global economy continues to face challenges, Allianz Trade has identified a new growth engine in Asia, India, and has planned further investments to support growth in the country this year.
Imran Khan, Country Manager for India at Allianz Trade in Asia Pacific, stated: “India is poised to become the second largest economy in Asia Pacific by 2030. An important driving force is its large and fast-growing middle class, which is helping to fuel consumer spending.
“Furthermore, India is going to be one of the most important long-term growth markets for multinationals in a wide range of industries, including manufacturing such as automotive, electronics, pharmaceuticals, speciality chemicals and in services such as banking, financial services, insurance, health care and IT.”
According to a recent Allianz Trade report, overall, global GDP growth is projected to slow to +2.7% in 2023 and +2.4% in 2024; the US will see a mere +1.1% GDP growth in 2024, the slowest rate since 2009.
China is expected to see a slow landing to +4.7% in 2024 and +4.2% in 2025; for Asia Pacific as a whole, Allianz Trade anticipates a growth rate of +4.1% for 2024 and +3.9% for 2025.
Meanwhile, with the Indian economy expected to grow by an average of +6.4% between 2023 and 2027, the country is on track to outpace regional peers – in terms of real GDP growth – over the next decade including China, emerging Asia as well as ASEAN countries, according to Allianz.
“Supported by strong economic growth and to service the needs of its customers, Allianz Trade has identified India as another growth engine in Asia. In response, Allianz Trade has recently appointed a new Country Manager to support growth in India and further investments are planned this year,” the firm stated.
In terms of exporting, the US remains by far the largest export partner for India, with export gains for India expected to reach $6.86 billion in 2024. The UAE and the Netherlands come next as top export partners, with export gains estimated at $2.68 billion and $1.58 billion respectively.
With export gains reaching US$1.29 billion and $1.01 billion respectively, China and Singapore round out the top five. Among the key sectors, India is expected to reap the highest export gains from software and IT services of approximately $19.28 billion in 2024, the report highlighted.
Regarding business insolvencies, a rebound in insolvencies in India has been forecasted for this year. Which according to Allianz Trade, will be largely driven by the catch-up effect due to the long suspension of courts during the Covid years.
Analysts said: “Insolvencies in India are expected to increase by +36% this year and +6% in 2024. Despite the relatively high insolvency numbers, both working capital requirement (WCR) and days sales outstanding (DSO) in India are expected to see a marginal increase of 5 days and 3 days respectively. Overall, Asia and Latin America remain the only two regions with insolvencies not yet returned to 2019 levels by 2024.”
Khan added: “The trade credit insurance market in India (excluding ECGC premiums) has grown by more than 16% on average over the past five years. While businesses continue to show robust growth, risk mitigation becomes equally important.
“Allianz Trade continues to help clients across sectors to do business with confidence and we look forward to working closely with our partners to support the Indian business and be a part of this growth journey, to which we anticipate the trade credit insurance industry should see 20% growth as businesses resuming normal.”
