### Summary
Commerce Minister Piyush Goyal stated that despite short-term inflation hiccups, India has achieved nearly a decade of controlled inflation, offering the lowest rates in the country's history.
### Facts
- 💰 Headline retail inflation reached a 15-month high of 7.44% in July, surpassing economists' expectations of 6.6%.
- 🌽 Vegetable prices and sustained cost pressures in staples like cereals and pulses contributed to the high Consumer Price Index (CPI) for July.
- 🍅 The government implemented various measures to curb food price rise, including distribution of discounted tomatoes and conducting e-auctions for rice and wheat.
- 💼 Commerce Minister Goyal expressed confidence in India's economy, highlighting comfortable foreign exchange reserves and high growth.
- 🌍 With a young demographic dividend, India aims to become a $35-trillion economy and one of the world's top three economies in the next 30 years.
- 📈 India is currently the fastest-growing economy and is projected to achieve a GDP growth of 6.5% for the current financial year.
- 🇮🇳 The current government inherited challenges such as unpaid oil bond debt, high interest costs, and faltering exports from the previous government.
- 🌱 Goyal emphasized the importance of sustainable and inclusive growth alongside value creation for shareholders.
### Summary
India's retail inflation in July rose to 7.44%, higher than market expectations, and is expected to remain elevated in Q3. The global currency market is experiencing significant turbulence, with the USD appreciating despite economic weaknesses. Heightened inflation and volatility in the currency market pose risks to the Indian market.
### Facts
- India's retail inflation in July was 7.44%, exceeding market expectations.
- Elevated inflation is expected to continue in Q3.
- The global currency market is experiencing turmoil, with the USD appreciating despite economic frailty.
- FII outflows have increased, but India's equity market is performing better than other emerging markets.
- The RBI has revised its inflation forecast upward and expects inflation to decrease to 5.7% in Q3.
- High interest rates and inflation are expected to impact corporate earnings growth and valuation.
- India's one-year forward P/E valuation has decreased from 20x to 18.5x.
- Bond yields have increased, leading to a divestment of equities and acquisition of bonds.
- The domestic market is supported by restrained FII divestment, robust purchasing by DIIs and retail participants, and outperformance compared to other emerging markets.
- Selling in global equities has increased due to concerns of deflation and defaults in China's realty and finance sectors.
- The author expects the selling from FIIs to continue in the short-term due to elevated global bond yields, US credit downgrade, and slowdown in emerging markets, but India will continue to outperform.
- In the last month, the MSCI World index was down 4.2% compared to MSCI India's 1.85% decrease.
### Summary
India's economy is growing rapidly and is projected to become the third largest economy by 2031. However, there is a significant disparity in per capita income among states, with some states significantly behind the national average.
### Facts
- India is the fastest-growing large economy globally and is driving cost competitiveness.
- India's middle class is estimated to reach 61% of the population with an average income of Rs 20 lakh.
- By 2031, India's GDP is expected to cross the $10 trillion mark.
- Per capita income in India has increased from Rs 90,688 in 2013 to Rs 196,983 in April 2023.
- Telangana, Karnataka, and Haryana have the highest per capita income, while Bihar, Uttar Pradesh, and Jharkhand have the lowest.
- The per capita income of Bihar is 17% of Telangana and one-fourth of the national average.
- There is a correlation between political stability and economic performance.
- India's per capita income ranks 141st out of 191 countries.
- India needs to shift its population from low-productivity sectors like agriculture to high-income domains and increase female workforce participation.
- The necessary interventions include investment in human infrastructure, agricultural advancements, climate resilience, land and labor reforms, planned urbanization, and more.
### Summary
Corporate India's June quarter earnings season showed robust profit growth despite lacklustre revenue expansion, with banking and non-banking financial companies leading the way. However, sectors such as information technology and chemicals experienced a slowdown in revenue growth. The overall demand remains an issue, but the upcoming general elections and a good start to the monsoon season are expected to boost demand.
### Facts
- Corporate India's June quarter earnings season had strong profit growth despite weak revenue expansion.
- Banking and non-banking financial companies led the profit growth, while export-oriented sectors like information technology suffered from weak sentiment overseas.
- The topline growth for BSE500 companies slowed down to 6 percent, with a significant number of them experiencing topline contraction.
- Sectors such as information technology and chemicals saw a slowdown in revenue growth, despite the "China + 1" benefits for the chemicals sector.
- Lower crude prices and rising competitive intensity affected the revenue growth for India Inc in the first quarter of this fiscal.
- Capital expenditure by companies increased, indicating a positive medium-term economic outlook for India.
- FMCG firms had double-digit profit growth but weak volumes expansion due to subdued rural demand caused by inflationary headwinds.
- The urban-focused consumer discretionary segment also had a weak quarter, affected by unseasonal rains and inflation.
- Auto companies had strong results due to robust demand and price hikes, with the passenger vehicles segment showing strong demand.
- The start of the monsoon season holds hope for a strong demand recovery, especially in the festival season.
The U.S. economy is forecasted to be growing rapidly, which is causing concern for the Federal Reserve and those hoping for low interest rates.
Thailand's economy grew at a slower pace in the second quarter due to weak exports and slower investment, prompting the government to lower its 2023 growth forecast, while the central bank may not raise rates again amidst faltering economic recovery and low inflation.
Malaysia's economic growth in the second quarter of 2023 was the slowest in nearly two years due to sliding exports and a global slowdown, prompting the central bank to warn of lower full-year growth and the possibility of the target being hard to reach.
U.S. economic growth may be accelerating in the second half of 2023, defying earlier recession forecasts and leading to a repricing of long-term inflation and interest rate assumptions.
India's economic growth likely accelerated to 7.7% in the April-June quarter, driven by strong service sector growth, high demand, and increased government capital expenditure, according to a Reuters poll.
The spike in retail inflation has raised uncertainty for investors and savers, with expectations of interest rate cuts being pushed to the next fiscal year and the possibility of a rate hike. The Reserve Bank of India projects inflation to stay above 5% until the first quarter of 2024-25, and food price pressures are expected to persist. While inflation may impact stock market returns, gold and bank deposit rates are expected to remain steady.
Nigeria's economy experienced faster growth in the second quarter of 2023, driven by the services sector, although the growth rate was lower than the previous year due to challenging economic conditions.
India's economy is experiencing consistent growth, and is predicted to become the fourth-largest economy within 18 months and the third-largest by 2028, driven by strong fundamentals and infrastructure development, while successfully reducing poverty; however, further reforms in areas such as patents, judicial, administrative, and process reforms are needed to boost economic growth.
India's economy is facing challenges as GDP growth declines, investment demand weakens, inflation rises, and job creation remains a major concern, highlighting the need for a comprehensive economic plan to address these issues.
The US economy grew at a slower pace in the second quarter than previously estimated, which is seen as a positive sign for the Federal Reserve's efforts to cool demand and curb inflation.
India's economy grew at its fastest pace in a year in the April-June quarter, driven by services and manufacturing, though economists warn of a slowdown ahead due to factors like rising food prices and slowing global growth.
The global economy is expected to slow down due to persistently high inflation, higher interest rates, China's slowing growth, and financial system stresses, according to Moody's Investors Service, although there may be pockets of resilience in markets like India and Indonesia.
Economists at Nomura and Morgan Stanley raise their growth forecast for India's fiscal 2024 after the economy grew at its fastest pace in a year in the April-June quarter, while BofA Global Research cuts their estimates as quarterly growth falls below their forecast.
India's GDP growth reached a four-quarter high of 7.8% in Q1FY24, with private consumption and services picking up pace, but challenges lie ahead with the sustainability of services growth and concerns over the monsoon and agriculture sector.
India's services industry experienced a slight slowdown in August, but overall conditions remained strong with record-high exports, indicating that the country will continue to be the fastest-growing major economy.
India's economic rise is seen as inevitable due to factors such as a consumer boom, context-appropriate innovation, a green transition, a demographic dividend, access to finance, major infrastructure upgrades, policy reforms, geopolitical positioning, and a diaspora dividend, although challenges such as unbalanced growth, unrealized demographic potential, and unrealized ease-of-business and innovation potential still need to be addressed.
India's consumer market is projected to become the world's third largest by 2027, driven by rising middle to high-income households and increased consumer spending on electronics.
India's industrial output rose 5.7% in July, its fastest pace in five months, driven by strong mining and electricity activity, but high inflation and slowing pent-up demand may hinder future growth.
India's economic growth is estimated to be closer to 7.5%, with the country's first quarter growth at 7.8%, reflecting India's increasing stature in the world.
China's economy has entered deflation territory and the debt crisis has worsened, while India's economy is thriving with GDP growth expected to exceed 7% and unemployment rates at a 12-year low; it is predicted that India will surpass China in per capita income by 2044 due to factors such as female education expansion, labor force growth, and higher total factor productivity growth.
India's goal of becoming a $5 trillion economy may be challenged as economists predict that nominal GDP growth may fall below the budgeted estimate of 10.5% for the current fiscal year, primarily due to subdued wholesale inflation.
The Asian Development Bank has lowered India's GDP growth forecast for FY 2023-24 to 6.3% due to the impact of extreme rainfall patterns on agriculture, while maintaining a growth projection of 6.7% for FY 2024-25, citing corporate profitability and strong bank credit as key factors. Additionally, the bank expects inflation to moderate and retail sales to be affected by food inflation, while India's external trade is expected to be affected by weak global demand. Despite these challenges, India's GDP growth outlook remains higher compared to its Asian peers.
The UK economy is expected to slow in 2023 and 2024 due to high interest rates, continued uncertainty, and low productivity, with GDP growth predicted to drop to 0.4% this year and 0.3% in 2024, according to economists at KPMG and the OECD.
India's GDP growth is expected to moderate over the next few quarters, with a projected growth rate of around 7% in the second quarter and a slowdown to around 4.5-5% in the second half of the year. Factors such as the fluctuating monsoon, lower reservoir levels, cautious rural demand, and the impact of monetary tightening are likely to contribute to this moderation in growth. The writer predicts a full-year GDP expansion of 6%, with future growth depending on factors such as the outcome of the next election.
The World Bank has raised its forecasts for Sri Lanka's economy, expecting growth of 1.7% in 2024 and a smaller contraction of 3.8% this year, citing progress in reducing inflation and increased tourism revenue, but also cautioning about significant uncertainty and downside risks.
Indian households are saving less than they have in 50 years, with net household savings declining to 5.1% of GDP in 2022-23, which poses a problem for India's long-term growth strategy that relies on debt-fueled household consumption and government investment.
China's economic slowdown, driven by a real estate crisis and prolonged Covid-19 measures, is raising doubts about its status as the largest economy in the world by 2030, while India is emerging as a promising economic powerhouse and attracting significant investments.
The US economy is predicted to slow down by mid next year, which will have a negative impact on global GDP, according to Neelkanth Mishra, Chief Economist for Axis Bank. Mishra also mentioned that China will grow slowly but not collapse, while India will be affected through various pathways such as a decline in services growth, goods demand, dumping of products, and financial market volatility. However, he believes that India's trajectory looks good in the next 5-7 years.
The Reserve Bank of India (RBI) expects consumer price index (CPI) inflation to ease below 4 percent in fiscal 2024-25 if there are no further shocks and a normal monsoon, with the central bank rethinking rate cuts only if CPI inflation remains at or below 4 percent on a durable basis.
Economists are adjusting their expectations for a rate cut in India to beyond the first quarter of fiscal year 2025, following a hawkish policy stance from the Reserve Bank of India (RBI) that emphasizes a 4% inflation target.
The Indian central government is likely to reduce its investment spending in the future to curb the budget deficit, creating an opportunity for the private sector to step in and drive investment growth, according to Goldman Sachs.
India's economy needs to grow at a rate of 8% per year and focus on investment in traditional sectors in order to surpass China as the largest contributor to the global economy, according to Barclays.
The International Monetary Fund has upgraded India's GDP growth forecast to 6.3% for 2023-24, citing positive factors such as monsoon rainfall, capital expenditure, new company registrations, and robust credit growth, leading to the possibility of growth surpassing 6.5% in Q2 FY24.
India's fiscal position is strong with steady revenue growth, and headline inflation is expected to remain within the target range, according to the government's monthly economic review.
The U.S. economy has defied expectations by experiencing faster growth, with a projected GDP increase of 4% to 5% in the third quarter, but concerns remain about a potential recession in the near future due to factors such as limited income growth, cautious business behavior, and economic restraints.
The U.S. economy is experiencing rapid growth, with GDP predicted to exceed 4% in the third quarter, but there are concerns that this may be followed by a recession due to factors such as stagnant incomes, cautious businesses, and economic uncertainties.
The US economy likely grew at its fastest pace in nearly two years in the third quarter, driven by strong consumer spending, rising wealth, and easing inflation. However, there are concerns that this robust growth may lead to further tightening of monetary policy to curb inflation. Economists expect growth to slow in the fourth quarter and next year.
India is projected to become the world's third-largest economy by 2030, driven by strong domestic demand, increased foreign direct investment, and a growing middle class, according to a report by S&P Global Market Intelligence.
The U.S. economy is expected to have grown at its fastest pace in almost two years in the third quarter, driven by strong consumer spending and rebounding residential investment, defying fears of a recession and showcasing the economy's resilience; however, growth could slow in the fourth quarter due to factors such as auto strikes and the resumption of student loan repayments.
Indian consumer spending during this year's festival season is predicted to be slightly better than last year, but not enough to significantly boost the country's already fast-growing economy, according to a poll of economists by Reuters.
The U.S. economy experienced faster-than-expected growth in the third quarter, driven primarily by increased consumer spending and inventory accumulation, but these factors are likely to be volatile in the coming quarters, and GDP growth is expected to return to normal levels in the fourth quarter and slow down further in 2024 due to the effects of the Federal Reserve's rate hikes and potential vulnerabilities in the economy, leading to a potential aggressive interest rate cut by the Fed.
High inflation is expected to persist in the global economy next year, posing a risk of interest rates remaining higher for longer than anticipated, according to a Reuters poll of economists. While some central banks were initially predicted to start cutting rates by mid-2024, the survey suggests that a growing number of economists are now pushing the more likely date into the second half of next year.
High inflation is expected to persist in the global economy next year, posing a higher risk than initially forecasted and indicating that interest rates will remain elevated for a longer period, according to a Reuters poll of economists. Most central banks are delaying interest rate cuts until the second half of 2024, with inflation still rising faster than desired. The poll also reveals downgraded growth forecasts and upgraded inflation predictions for a majority of the surveyed economies. The U.S. economy stands out with unexpected strong growth, while some economists suggest that current policy may not be restrictive enough.
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