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Originally Posted by sabahatbhutta
Only 5 out of 15 largest trading partners of India are European countries including America. Indian economy is not that much associated with EU and America so it can not be harmed by a recession in EU. India is a market of more than 1.2 billion people.Its not a small market dear.
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India's main export partners are the USA, UAE, Singapore, China and the EU. As I said earlier, global economies are extremely integrated right now and a huge recession in the USA will take down China, South Korea, Japan, Singapore etc with it. In fact, THIS HAS ALREADY HAPPENED. In the wake of 2008 recession, growth slowed in Germany, Japan, China and South Korea (they are all exporters) and thousands of manufacturers were forced to close. If, as YOU say, the American economy collapss (it won't, but lets assume it does), the results will be much much worse. Also, the demand for oil will fall, pushing down the price (same happened in 2008), hurting the Arab countries.
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which Government would dare to cut the social benefits. This move has great political repercussions.
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Maybe you are not familiar with American politics because the Americans have made many tough decisions in the past. Just last year, when Obama needed the support of the Republicans to raise the debt ceiling, the Republicans used this as a bargaining chip to demand that the budget deficit be reduced. Many services (including education) suffered major cuts.
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Pakistan's trade share with EU and China is almost equal in size. It won't be a major market but an average market with bright opportunities in Natural Resource exploration, Heavy Industries, Railway, Air Transport etc. these sectors are less exploited and are glamorous enough for those foreign investors, who are pessimistic of a future in EU markets. Moreover the energy sector is a great potential profit extractor. Pakistan is a growing demands market that each investor dreams of.
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Chinese exports are currently around 1900 trillion while their imports are in the neighborhood of 1700 billion dollars. Pakistan's exports to China are around 2.5 billion and imports are around 7.5 billion which means that trade with Pakistan is negligible to the Chinese. Furthermore, no investor is interested in a country that is being torn apart by terrorism and religious extremism.