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India's GDP, jewellery demand at extremes, says World Gold Council
Sharad Mistry
MUMBAI, January 22: India, with a strong gold culture, tops the list of 18 countries with a high level of jewellery demand even when its gross domestic product (GDP) per capita at purchasing power parity is the lowest. Interestingly, however, India's per capita jewellery consumption, according to a World Gold Council study, is among the lowest at 0.5 gram, against the highest of 9.1 for Saudia Arabia but just 1.3 gram of the USA.India, with a population of around 883.5 million, has a GDP per capita at purchasing power parity of five, against 100 of the US. Despite this low level of GDP related purchasing power parity, it has the highest jewellery demand of 437.8 tonnes (in earlier years, for, in calender 1997, the total gold import was placed at 737 tonnes). China is a distant second with a jewellery demand of 209 tonnes. It's per capita jewellery consumption is a miniscule 0.2 and has a jewellery index of 158, while its GDP per capita at purchasing power parity is nine. In terms of jewellery demand
index, however, India with 786, stood third after Saudi Arabia's 1,417, but a low jewellery demand of just around 145 tonnes. Saudia Arabia's GDP per capita at purchasing power parity is placed at 51, more than 10 times that of India's five. Hong Kong, with GDP per capita at purchasing power parity at a high of 73, stood third with its jewellery index at 740. Meanwhile, the WGC feels, over the next couple of years, demand for gold is expected to rise by around 1,427 tonnes in some six countries. This,however, will not occur overnight, for it will take time and will occur after the countries adopt the deregulation (of gold import policies). Nonetheless, these estimates demonstrate that substantial increase in demand are possible. Even a proportion of the extra import duty revenue earned would be very welcome for the governments concerned. According to the WGC study, some of the countries where implied demand for gold could be higher are: China (831 tonnes), Brazil (281 tonnes), Mexico (204 tonnes),
Indonesia (65 tonnes), South Korea (24 tonnes), Malaysia (23 tonnes) and Thailand (11 tonnes). The WGC study seems to have been prepared much before the financial crisis hit the South East Asian countries in October last. To that extent, the rise in demand for gold could be less in the coming years. Further, the WGC study says, these levels of demand result from a very crude assumptions and would not necessarily be reached with deregulation, some of the six countries in the third group already have more lax regimes than India.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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