In the US, we’ve got the second-biggest bank collapse ever.
Europe is still grappling with soaring energy prices and undersupply.
And at home, the RBA has just delivered a shocking rate rise as costs continue to climb.
No matter where you look, dark clouds seem to be forming over the global economy. But as fears of recession grow, investors need to realise that markets aren’t doomed.
Sure, there may be some ongoing turbulence for a while to come, but it won’t last forever. Instead, if you’re really paying attention to all the happenings, you should be looking toward the opportunity.
After all, there is one glaring outlier amidst all this uncertainty…
One economy that is not only proving resilient, but also growing rapidly…
The new emerging economy
In days gone, this bastion of hope for growth has typically come from China.
During our last major credit crunch, back in 2008, the Middle Kingdom helped offset some of the pain for Australia. Their ongoing boom at the time continued to deliver massive returns for our mining sector, propping up our economy better than many of our peers.
But you shouldn’t expect that same kind of fortune this time around.
As Macquarie’s chief economist, Ric Deverell, bluntly put it this week:
‘China’s not going to save the world this time,’
So, if not China, then who?
It is India…
With its gargantuan population, massive economic overhauls, and rapid industrialisation, India is the new powerhouse of global growth. Even now, amidst the uncertainty, their GDP is forecast to grow by 6.9% this year.
Already sitting in the fifth spot for total GDP, by 2027, India is expected to leapfrog both Germany and Japan for the third position. And from there it will likely continue to grow as it fights to overtake China and the US as well!
That’s why, right now, there’s perhaps no better place to invest than India. And just like our trade relationship with China, Aussie miners are one of the best ways to profit from India’s rise.
Critical minerals are key
See, as I declared in a previous article over a year ago, the next decade is all about India for Australian exporters. That’s because we are fortunate enough to be working on a free trade agreement with India after more than a decade’s worth of negotiation.
It wasn’t easy getting that deal done, and it isn’t finalised just yet, but it’s likely to be in place by the end of this year. The main goal now is simply to specify all the gritty details.
And when it comes to critical minerals like lithium, nickel, and graphite, India is in desperate need of more. As their own Commerce Minister, Piyush Goyal, made clear last month:
‘India is short of critical minerals. Australia has a large reserve of critical minerals that go into (electric vehicle) batteries, which isn’t fully processed or manufactured presently,’
This is why critical minerals are likely to become a cornerstone of the FTA with India. And it is why you, as an investor, should be keeping a close eye on these trade talks.
Our resident commodities expert, James Cooper, has been on top of this story for a while now as well. Back in November, he shared his views on why investors should be excited about the India opportunity:
‘India’s transition toward an advanced economy will take time. Still, as a democracy, its growth is much more sustainable, likely to maintain momentum as it forms long-term trusted partnerships with Western businesses.
‘In fact, India has a real possibility of taking market share away from China as the West looks to divert its reliance on the Communist State.
‘As a young nation, India also has the potential for much longer-term growth versus China’s ageing population…
‘…As a commodity investor, it’s time to take notice.
‘In an age of scarce mineral supplies, the demand for commodities is set to reach NEW extremes.
‘Whether it’s the new powerhouse, India, or China’s re-emergence from lockdowns, demand for metals is COMING.’
With hopes for a China-led recovery looking less and less likely, India is now our best bet. And that is why, despite the volatility, commodities are still one of the best places to invest right now.
Regards,
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Ryan Clarkson-Ledward,
Editor, Money Morning
