OECD Development Centre pegs India’s GDP growth at 7.4% this fiscal
The Indian economy is expected to record 7.4 per cent growth in 2018-19, a new report by the OECD Development Centre has projected. In its update to the Economic Outlook for South-East Asia, China and India, the OECD Development Centre sees Indian economy recording 7.5 per cent GDP growth in 2019-20.
This growth projection for 2018-19 falls within the 7-7.5 per cent range forecast by the Economic Survey released by the Indian Government in January.
Economic growth in Emerging Asia, the 10-member countries of the Association of South-East Asian Nations (ASEAN), China and India, is expected to remain stable in the near-term, according to the update.
Average real gross domestic product (GDP) in the region is expected to grow 6.6 per cent in 2018 and 6.5 per cent in 2019, because of robust consumption and investment, the update said.
“Emerging Asia stands to show continued strong growth in the near term if domestic and external risks are properly managed,” said Mario Pezzini, Director of the OECD Development Centre and Special Advisor to the OECD Secretary-General on Development.
The update has been produced by OECD Development Centre in collaboration with the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the Economic Research Institute for ASEAN and East Asia (ERIA).
The 10 ASEAN economies are expected to see average growth of 5.3 per cent in both 2018 and 2019, with the highest rates in Cambodia, Lao PDR and Myanmar (the CLM countries), Vietnam and the Philippines.
Overall, the external positions of Emerging Asian economies remain stable; current account balances have improved in a number of economies in the region and foreign direct investment data flows are strong.
Policy direction
Policy rates in the region have been increased, mainly in response to increases in inflationary pressure and weakness in some local currencies, though monetary authorities have also used reserve requirements to maintain liquidity. Overall, the fiscal positions of Emerging Asian economies are relatively sound. The fiscal policy direction, however, is mixed.
According to the update, risks include the effects of rising interest rates in advanced economies, uncertainty about the implementation of planned infrastructure projects and the consequences of rising protectionist sentiments internationally on regional integration.
A special chapter of the update addresses the challenges and opportunities facing Emerging Asia in developing cross-border e-commerce.
The region is already a major player in e-commerce, and should continue to contribute to the sector’s global growth in the future. The use of information and communications technology (ICT), ICT infrastructure, transportation and logistics, payment systems, and legal and regulatory frameworks will all affect such future growth.
To benefit from fair and efficient cross-border e-commerce, governments in the region will need to improve connectivity, develop skills and human capital, implement new policies to address digital security and consumer protection, and foster regional and international co-operation, the update said.
Source: THE HINDU BUSINESSLINE
US: Economy to continue to grow at a healthy pace – Nomura
Analysts at Nomura expect the US economy to continue to grow significantly above potential in 2018 and 2019, supported by stimulative fiscal policy, before growth decelerates towards potential over 2019 and into 2020.
Key Quotes
“Job gains remain well above the long-term sustainable pace and will likely continue to put downward pressure on the unemployment rate through 2019 before tighter monetary policy and financial conditions eventually slow employment growth. However, we expect slow productivity growth to persist, held down, in part, by structural declines in underlying business dynamism, limiting wage growth.”
“Inflation: Transitory factors that that held down inflation in 2017 have largely abated. For 2018-20, we expect core inflation to pick up gradually as labor markets tighten and the economy moves towards potential. Core PCE inflation may pick up slightly faster than core CPI as healthcare service inflation could accelerate while rent inflation gradually slows. With upside risk to healthcare prices as well as expected further labor market tightening, we expect core PCE inflation to reach 2.4% in Q4 2020.”
“Policy: Facing strong momentum in aggregate demand, tightening labor markets, and inflation at the 2% symmetric target, we expect the Fed to hike two more times in 2018 and two times in 2019 before taking a pause through 2020. With our neutral rate estimate between 2-2.25%, we believe monetary policy will remain in a slightly restrictive stance for some time, tightening financial conditions. We think the roll-off of the balance sheet will continue to exert upward pressure on long-term interest rates, as will the large increase in the federal budget deficit.”
“Risks: Financial conditions remain accommodative but recent market activity, and history, suggest they can turn quickly. In our view, protectionist US trade policy remains a key risk as US-China tariffs take effect and the US moves forward with an investigation into imports of autos and auto parts. In addition, waning fiscal stimulus in 2019, with the possibility of a fiscal cliff in 2020, could create market angst.”
Source: FXSTREET
China’s carbon emissions likely to decline: research
China’s industrial upgrading and energy structure transformation are the main reasons for its declining carbon emissions, and the declining trend is likely to continue, according to recent research.
Led by Tsinghua University, the research was co-conducted by experts from China, Britain, and the United States. The research draws on data from China Emission Accounts and Datasets, which gathers international experts on China’s emission accounting methods and applications.
Researchers quantitatively evaluated the drivers of the peak and decline of China’s carbon emissions between 2007 and 2016.
The research found that China’s carbon emissions increased between 2000 and 2013, while carbon emissions declined year after year from 2013 to 2016.
The research showed that the increased infrastructure investment during 2007 and 2013 led to a rapid increase in carbon emissions. After 2013, China’s investment in infrastructure slowed down. At the same time, industrial upgrading and declining coal consumption led to a decline in carbon emissions.
The research concluded that the decline of China’s carbon emissions is likely to be sustained if the industrial upgrading and energy system transitions continue.
The research provides a scientific basis for the government to formulate emission reduction policies and accelerate the carbon emission reduction process.
The research was published in the journal Nature Geoscience.
Source: XINHUA
China says its second-quarter GDP growth was 6.7%, meeting expectations
China posted second-quarter GDP growth of 6.7 percent from a year ago, slightly lower than 6.8 percent in the first quarter of 2018 as Beijing has been cracking down on risky credit amid escalating trade tensions with the U.S.
The official reading was in line with expectations from analysts polled by Reuters.
The headline figure was no surprise as any impact from current U.S.-China trade scuffles will only factor in the second half of the year, said Fraser Howie, an independent analyst.
There may be a bumpy ride ahead as China’s economy is not impervious to external threats, he added.
“China’s economy can be knocked, and when it comes to trade, it influences a lot of sectors, a lot of jobs associated with it. Net export sheds are a small percent of GDP but your brain is only 3 percent of your body mass [and] losing 3 percent can be very important to you,” Howie told CNBC’s “Street Signs.”
It’s a delicate balancing act.
Trade tensions between China and the U.S. have weighed on sentiment, particularly as the property market is slowing in first-tier cities such as Beijing and Shanghai, said Hao Zhou, senior emerging market economist for Asia at Commerzbank.
“I think it’s a little bit tricky at this moment. On the one hand, China commits to financial deleveraging. On the other hand, China sees growth moderation and growth slowdown is a risk for the economy as well,” Zhou said on “The Rundown.”
Fixed asset investment growth for the first half of 2018 was a record low at 6.0 percent from a year ago, while industrial output for June matched the the slowest growth rate in over two years at 6.0 percent, according to Reuters’ records.
The situation poses a policy dilemma as the China needs to implement relatively tight monetary policy to force financial deleveraging. However, it also needs easier monetary conditions to support growth.
The People’s Bank of China has already cut banks’ reserve requirements three times this year.
As the risks from the U.S.-China trade war will be a drag on overall growth in the next few years if China’s trade surplus against the U.S. narrows substantially, Beijing is likely to continue easing monetary policy going forward, Zhou said. That is particularly since domestic consumption will slow on escalating trade tensions.
Although Beijing’s official GDP figures are closely watched as an indicator of the health of the world’s second-largest economy, many outside experts have long expressed skepticism about the veracity of China’s reports.
Source: CNBC
WPI inflation at 4.5-year high, grows 5.77% in June
India’s wholesale inflation grew 5.77 percent in June, a four-and-half year high, driven by some food items and fuel prices, latest price data released by the commerce and industry ministry showed.
A higher inflation in the month of June can also be attributed to an unfavourable base effect. WPI witnessed a growth of 4.43 percent in May and 0.90 percent in June 2017.
Wholesale inflation rate, measured by Wholesale Price Index (WPI), is a marker for price movements in bulk buys for traders and broadly mirrors trends in shop-end prices.
“The lagged transmission of higher crude oil prices, an uptick in cotton prices and electricity tariffs, the hardening of inflation for manufactured products as well as an unfavourable base effect, led to the sharp pickup in the WPI inflation to a 54 month high in June 2018,” Aditi Nayar, Principal Economist at ICRA said.
The data for the month of April has been revised to 3.62 percent from 3.18 percent earlier.
Primary articles, which accounts for more than a fifth of the entire wholesale price index witnessed a uptick to 5.3 percent in June from 3.16 percent in May owing to fuelled by higher prices of Cereals, wheat, vegetables, potatoes, non-food articles, fibers and minerals.
Food articles saw a slight increase, growing 1.8 percent in June from 1.6 percent a month ago. Vegetables prices saw a sharp jump, rising 8.12 percent in June as compared with a growth of 2.51 percent in May.
Continuing with the trend, potato price peaked, rising 99.02 percent in June from 81.93 percent in May.
However, prices of fruits underwent a sharp correction, rising 3.87 percent in June from 15.40 percent a month ago.
Prices of pulses have continued to slump for over a year now, with rate of decline relatively slowing at (-) 20.23 percent in June, as compared with de-growth of (-) 21.13 percent in May.
Fuel and power inflation, which has a weightage of 13.15 percent in WPI, grew at 16.18 percent in June from 11.22 percent in May.
Petrol prices are up 17.45 percent in June from 13.90 in May, while diesel prices grew 21.63 percent in June as compared to 17.34 percent in May.
“An unfavourable base effect as well as the revision in electricity tariffs, and prices of ATF, LPG, naphtha and furnace oil, contributed to the considerable rise in the inflation for fuel and power to 16.2% in June 2018 from 11.2% in May 2018,” Nayar said.
Last week, data released by the government showed that retail inflation grew 5 percent in June, a five-month high, from May’s 4.87 percent on the back of rising fuel prices. Factory output witnessed a tepid growth of 3.2 percent in May as compared with 4.9 percent jump in April, owing to sluggish manufacturing output.
A higher inflation for the month of June keeps the chances alive of a further rate hike in the month August, according to economists. The RBI governor headed Monetary Policy Committee will be meeting later this month to review interest rate regime.
“The sharper than expected uptick in the WPI inflation in June 2018 reinforces our expectation of a likely repo rate hike at the next MPC meeting in August 2018,” Nayar said.
Source: MONEYCONTROL
India expected to be $10 trillion economy by 2030: Economic Affairs Secy
The Indian economy is at a “take off” stage and is expected to be the world’s third largest by 2030 with GDP worth USD 10 trillion, Economic Affairs Secretary Subhash Chandra Garg said.
“Good days are ahead and lot of good work is happening in the economy. The economy is on a stage of take off where Indians can legitimately hold their heads high,” he said here.
In the first 40 years of independence, the country hardly grew at 3.5 per cent, and today 7-8 per cent is the norm, Garg said at a function to mark the platinum jubilee celebrations of the Institute of Cost Accountants of India.
“By 2030, we can legitimately expect to be a USD 10 trillion economy. That is the challenge. That is also the opportunity,” he said.
“Eight per cent growth is very much achievable… If we keep that… we can look forward to be an Indian economy of USD 10 trillion which would be the third largest economy in the world,” Garg said.
His comments come on the heels of latest World Bank data showing that India has emerged as the sixth largest economy globally, surpassing France, in 2017.
In 2017, it became the sixth largest economy with a Gross Domestic Product (GDP) of USD 2.59 trillion, relegating France to the seventh position, according to the data.
“We expect the Indian economy to be a USD 1 trillion digital economy by 2022 and going forward… possibly by 2030, the digital economy would be half of the total economy,” Garg said.
India’s economy grew at a seven-quarter high of 7.7 per cent in the three months ended March, helped by higher government spending and investments.
Source: PTI