Wednesday, 25 January 2006

Current account rebalancing and birth rates

Brad Setser has another post about current account rebalancing and adds these in the comments section:

i see greater potential to increase consumption in the emerging world, and for the emerging world to drive global demand growth...

i want more emerging markets to be more like India. India has enjoyed strong consumption growth recently, and, lo and behold, is now running a current account deficit!

Funny that he should mention India as an example. In some respects, India is more like the US than it is like other emerging Asian economies.

From the CIA World Factbook:

CountryBirths per
thousand
Children born
per woman
India22.322.78
United States14.142.08
China13.141.72
Taiwan12.641.57
South Korea10.041.26
Singapore9.491.05
Hong Kong7.260.93

In any case, is the global current account imbalance still relevant to financial markets? As Andy Xie says: "Investors do not seem to care about imbalances anymore."

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