J.P. Morgan’s Jahangir Aziz highlights shifting dynamics in emerging markets, emphasising the importance of supply chain security and recognising India’s potential as a dependable manufacturing hub amidst global disruptions and geopolitical risks.
Jahangir Aziz, J.P. Morgan’s head of emerging markets economics, said the global backdrop remains uneasy but still broadly supportive for developing economies, even as higher oil prices, renewed conflict in the Middle East and rate rises from major central banks stoke fresh worries. In an interview, Aziz argued that the reason the US Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England have tightened policy is that they are more confident about growth than they were six months ago, which in turn helps external demand for emerging markets. He said those economies have already absorbed a succession of shocks in recent years, from the pandemic and inflation to the energy spike after Russia’s invasion of Ukraine.
Yet Aziz was far less upbeat about the source of growth in the developed world, saying the recent strength in the US has depended less on wages or investment and more on consumers drawing down savings. He pointed to a decline in the household savings rate from around 5% to about 2%, alongside slower wage growth, and warned that the remaining room to keep spending supported by savings is now limited. His comments echo earlier remarks to Moneycontrol, where he questioned whether investors were looking too much at markets as an index story rather than at the prospects for individual companies and economies.
Aziz also argued that the old idea of “emerging markets” as a single investable bloc has largely broken down. In his view, China no longer acts as the main magnet for foreign capital, and each large developing economy now trades on its own fundamentals. India, he said, stands out in equities because it is both sizeable and diversified, but it has gone nowhere in recent periods, making it difficult for global investors to deploy large sums without pushing valuations higher. On the fixed-income side, he said there is still room for inflows, but US Treasury yields near 5% make it harder to lure money back into emerging-market debt. Moneycontrol reported that Aziz has also criticised India’s tariff barriers and argued for capital market reforms to draw in foreign investment.
The sharper part of his analysis was reserved for India’s position in a world that is moving away from cheapest-cost manufacturing and towards safer, more resilient supply chains. Aziz said companies and governments are now prioritising security over pure efficiency, and he cited J.P. Morgan’s own efforts, including a $1.5 trillion lending push and $10 billion of capital aimed at businesses tied to security and supply-chain resilience. According to J.P. Morgan, the bank has published research making the same point, stressing the value of diversified suppliers and warning against overdependence on single-country inputs, especially in sectors exposed to geopolitical risk. Aziz said India is missing a chance to present itself not simply as a lower-cost alternative to China, but as a more dependable one.
He used pharmaceuticals to make the point. India may be a major exporter of generic medicines, he said, but it remains heavily reliant on Chinese imports for active pharmaceutical ingredients, the raw materials used to make drugs. That leaves the supply chain exposed even if the final product is shipped from India. He made a similar argument about solar panels, batteries and industrial chemicals, saying the country has often built the downstream parts of production without developing the upstream base. Reuters-style reporting from J.P. Morgan’s own supply-chain material has made the same case more broadly, arguing that resilience now matters as much as cost in sectors from autos to advanced manufacturing. Aziz said the policy response in India still leans too much towards improving the “ease of doing business” rather than building a reputation for being the safest place to produce.
Aziz was also sceptical that India’s biggest listed companies will be the main winners from the next phase of change. He said new industries are more likely to emerge as the global focus shifts from cheap production to secure production, and added that artificial intelligence will probably create more business formation than destruction, even if it restrains wage growth in the near term. He said J.P. Morgan’s research does not yet support a view that AI will produce mass job losses, though it has weakened labour’s bargaining power and capped pay gains. That, he suggested, is part of a wider transition: the next growth story for India and other emerging markets will not come from protecting old strengths, but from recognising where the world’s next premium is heading.
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