IMPACT OF EUROZONE SOVEREIGN DEBT CRISIS ON CHINA AND INDIA

This paper analyzes the impact of the Eurozone debt crisis on China and India. Using Markov-switching analysis, we discern regimes in economic growth as well as financial markets and study the impact of the global financial crisis and Eurozone crisis on the same. We identify vulnerability and robustness factors governing the degree of exposure and resilience to the crisis for both these economies. In view of strong trade and financial linkages, the Eurozone crisis may have marred prospects of recovery in the aftermath of the recent Great Recession in both China and India. China, however, is found to be more resilient to the crisis possibly due to stronger macroeconomic fundamentals.