India offers remarkable resilience and opportunity amid AI frenzy: HSBC

India has managed to cushion the economy from higher energy prices and AI fears so the story should not be one of concern about India losing its way in a world of AI but one of remarkable resilience and opportunity according to a new HSBC Global Investment Research reportThe AI frenzy has sucked capital into a narrow sector and a few selected economies Returns at least for a while have been stunning But given recent jitters its worth to widen the perspective againThats where India comes in bypassed by much of global capital in recent quarters The challenges in investors minds are easy to recount the absence of a vibrant AI hardware sector the risk that services exports might suffer as AI is adopted more widely and the spike in global energy prices which historically hit India hard Well time for a rethink said HSBC economistsIndias economy has weathered these challenges so far with remarkable ease After a little pullback earlier this year around the height of the conflict in the Middle East activity has bounced backFor one India has managed to cushion the economy from higher energy prices with the current account deficit not blowing out as in previous such episodes That is in part being helped by the continued robust rise in services exports which have yet to show in aggregate an adverse impact from AI the economists notedMeanwhile private credit growth and corporate revenue growth have rebounded car sales are strong and government infrastructure spending continues to push higherThe export rebound is especially noteworthy occurring in a global environment where most trade is driven by AI hardware a sector in which India is not a major playerGiven that world trade in nonAI goods has largely stalled this suggests that India is gradually gaining market share said the reportOn the goods side shipments have gone sideways for a few years after a rampup during the pandemic But note the acceleration in the last few months Meanwhile services exports continue to shoot up in a straight line and are not far off goods exports on an annual basisThis suggests that worries over AI derailing the sector are overdone Sure the technology will make some jobs like call centres obsolete replacing workers with bots but it opens other doors by raising the productivity of Indian workers in fields that they previously struggled to compete in according to the reportOn the domestic side activity has picked up too Accelerating credit growth for example hints at stronger investment spending to come including private firms that have for years lagged in the capex cycleMore granular data also shows that credit growth to corporates ndash larger firms usually pursuing big capex projects ndash has accelerated particularly strongly said the reportThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever