Monday, September 26, 2016
Indian economic growth driving oil demand growth
India has become the centre of the world’s oil demand growth and the country’s economic expansion will affect global commodities, Citigroup said in a research note.
The world’s second-largest country by population after China will see its economy expand at about 8 per cent a year through 2021, Citi researchers including Ed Morse said. The country’s working-age population will increase by 220 million over the next 20 years, and about 240 million people will move to cities.
Urbanisation and rising incomes will boost demand for transportation fuels, gold jewellery and electricity generation, while looser regulations should spur increased exports of iron ore into the market.
"While India is no China, the sub-continent’s largest economy is becoming the third-largest oil consumer and importer of oil, with a tangible impact on oil, coal and iron ore markets, less so on metals," Mr Morse said. "As India’s base rises, so too should its global commodities’ impacts."
Urbanization and rising incomes are the key. India is not the only country experiencing these phenomenon but it is the biggest.