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Blackstone's Stephen Schwarzman: India only has lower levels of growth not a recession; it's a great long term play

Updated : September 18, 2019 20:15:47 IST

Blackstone co-founder Stephen Schwarzman says there are clear signs of a global slowdown and there is a risk of Europe slipping into recession. In an interview with CNBC-TV18, he said Blackstone is positive on India and it is a great long term prospect.

“It is pretty clear that globally the economy is slowing down at different rates in different parts of the world,” Schwarzman said.

“US is the biggest economy. We are slowing in manufacturing but we still have a full employment economy, we still have high levels of consumer confidence and consumers create 70 percent or maybe even a little more of the economy in the US. So if manufacturing, which is roughly 11, is a little slower, in fact, going down then we can still keep growing for quite some time unless there is something that shakes confidence which is really a geopolitical type of event that you cannot predict.

"Europe is very slow, around 1 percent growth and they are having enormous troubles trying to get above that. They have interest rates that are below zero and don’t even know how to cope with that. So if they slip into the recession, they get a lot of the trouble getting out and that is possible.

"In Asia – China, which is the biggest economy by far, is slowing. They have a lot of policy things they can do to keep their economy going but the bias will be lower rather than higher and because China is going down, that affects emerging markets (EMs) because EMs are the big suppliers to China,” he added.

“Trade is shrinking around the world. That is not helpful in of itself but it also scares people around the world and stops other kind of investments that perhaps they would be making. So it will be very useful to find some accommodation between US and China. So this slowing world won’t create recessions,” said Schwarzman.

Indian economy is undergoing a slowdown with disappointing gross domestic product (GDP) growth for the past few quarters. Most sectors are under pressure with the downturn severely affecting the auto and FMCG sectors, increasing fears of job losses. However, Schwarzman said that the country isn't in recession.

“What feels like a slowdown in India isn’t a recession. It is just lower levels of growth. It may feel like a recession but it is not,” he said.

“We think India is a great long-term play. Its gross domestic product (GDP) per capita goes up, it is a huge population country which will probably within 10-20 years will be the largest population in the world. We have a long-term positive view on India and when things go slower, for us in a way that is even a better opportunity because people need to sell assets — because of the credit issues in India, for us we can be long-term investors.

"As long as we can improve any asset that we buy then we are very happy to do that because we think India will be one of the fastest growing countries in the world over a long-term basis. So it is a remarkable opportunity for us,” he said.

“We think overtime we are going to be putting a lot more capital into India,” he added.

The real estate sector has been struggling for quite some time and the government has recently announced a series of measures to address the concerns of the housing sector. Schwarzman said that realty in the country offers an opportunity.

“It is an opportunity. We also own 22 companies in our private equity area which has also been interestingly our highest return private equity business in the world. So the reason we are positive on India is that it has been terrific for us.

"One of the things we do is we can improve the assets. We don’t buy things just to own them. We are not like the stock market, we look at a programme to make a company better than it has been. So it is a great benefit to our investors.”
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