OPINION: From a macro viewpoint, are things really that bad?

DAVOS - Right on time the talking has started and the snow is falling. Meanwhile global markets are experiencing one of the worst starts to a year as global growth concerns intensify. China and the oil price are being widely blamed for causing the rout and both have dominated talks today. However, from a macro-economic perspective, is it really that bad?

With the Chinese Vice President Li Yuanchao in attendance at the World Economic Forum's annual meeting in Davos the focus was bound to turn to China. Many believe China is one of the primary sources of volatility impacting global markets, with uncertainty surrounding the currency, stock market and even the reform process. We would agree that many of these factors have indeed added uncertainty, but still believe that China is not in imminent danger of a hard landing.

It was interesting that the vice president was at pains to point out that China was not starting a new global currency war, and would continue to manage the currency. That, however, seems to us to be the primary source of concern - that the government in Beijing has lost the confidence of investors in its ability to manage the country's transition to a services based economy.

The news is, however, not all gloomy. In an environment of global growth concerns it was interesting to note that the International Monetary Fund (IMF) remains optimistic about the prospects for Indian GDP growth. On Tuesday, the IMF released a report reiterating growth forecasts of 7.5% for the next two years. In the context that they have also trimmed global economic growth forecasts at the same time, it shows the resilience of the domestic India growth story.

Jonathan Schiessl is head of global equities at Ashburton Investments.

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