New Delhi: Over the past 35 years, the US has combined the second-lowest GDP growth volatility among large, advanced economies with the second-highest mean growth rate. The combination is unusual. Most economies trade growth for stability or stability for growth. The US trades neither away.This has profound implications for Indian investors. A moderate allocation to US/global equity through GIFT City structures provides genuine diversification away from India-specific risk and a passive currency hedge.The COVID-19 shock provides the cleanest natural experiment in modern data. Every major economy experienced the same exogenous shock at the same time. The differences in 2020 contractions and 2021 rebounds reveal the underlying resilience properties of each economy.Gfx: Shruti Naithani | ThePrint
The US 2020 contraction was −2.2 percent, against −10.3 percent for the UK, −9.0 percent for Italy, −7.7 percent for France. The 2021 rebound was 6.1 percent for the US. The two-year sum is +3.9 percent, making the US the only G7 economy with a net positive growth outcome from the pandemic shock. China and India also posted positive two-year sums, of +10.6 and +3.9 percent, respectively.The post-GFC (Global Financial Crisis) unemployment recovery shows a similar asymmetric pattern. The number of years required for unemployment to return to its 2007 pre-crisis level was 10 for the US, 8 for the UK, 12 for France, 11 for Canada and 15 for Australia. Italy and China had not returned to their 2007 unemployment levels by 2024. Germany never exceeded the 2007-level.Gfx: Shruti Naithani | ThePrint
