- India is facing a major economic slowdown as it is vulnerable to slowing growth in emerging markets.
- Years of populist policies and lack of reforms have led to a large current account deficit, high inflation, and falling currency.
- The stimulus programs after 2008 could only postpone problems, and India now has limited ability to enact new stimulus or use fiscal policy due to constraints.
The document provides an overview of the global economic slowdown presented by Nishant Chhabra. It defines a slowdown as a reduction in GDP for at least two quarters and a recession as two consecutive quarters of negative GDP growth. It discusses causes of slowdowns like decreased consumer confidence leading to less spending. The US economy is discussed as consumption-based and impacted by the housing crisis and tightening credit. The global impacts are described, including effects on countries like India from decreased outsourcing and exports. Sectors facing slowdowns are also outlined such as manufacturing, real estate, banking, and exports. Corrective steps proposed include actions by the RBI, reducing taxes, and price drops in real estate.
India's GDP growth rate declined to a three-year low of 5.7% in the second quarter of 2017, losing India its status as the world's fastest growing major economy to China. This slowing was attributed to demonetization, GST implementation, and a broader slowdown in private investment, government spending, consumption, and net exports. Structural reforms are needed to boost exports and investment to support stronger GDP growth going forward.
The document summarizes the global economic crisis and its impact on India. It discusses how the subprime crisis originated from greed of investment bankers and failure of regulators. This led to a boom and speculation in the housing market. For India, about 30,000 IT jobs were impacted and IT revenues declined. The rupee sharply depreciated against other currencies. Foreign exchange reserves outflow increased. Investment flows and stock markets declined significantly. Exports contracted due to reduced global demand, impacting India's export-oriented economy and increasing unemployment. Inflation rose sharply in India as the central bank revised rates multiple times.
The document analyzes GDP components and economic factors of several countries. It finds that China and India have the highest growth potential after the US and are now the second and third largest economies worldwide. China, the US, Argentina, and Canada have higher savings than investment, indicating a current account deficit. The document recommends investing in India's services sector, which has strong 7.2% real GDP growth and a current account deficit that shows domestic market demand.
The document discusses the current state of the Indian economy and steps taken by the Reserve Bank of India to promote economic growth. It notes that the Indian economy is facing issues like high fiscal and current account deficits, lack of foreign investment, and inflation. The RBI has taken measures like raising borrowing limits for banks and allowing more foreign direct investment and external commercial borrowings to address high inflation, rupee depreciation, and boost investment. The document also analyzes the impacts of factors like global economic conditions, currency fluctuations, and policy reforms on the Indian economy.
To sustain 8% growth in the Indian economy and reach its full potential, additional foreign investment is needed, especially in infrastructure renewal and agriculture. Specifically, India needs around $20 billion per year in foreign direct investment for the next 10 years to support industrial and service sector exports as well as infrastructure projects. It should also welcome foreign institutional investment, while maintaining political and economic stability to retain such investments over the long term.
The document summarizes the current state of the Indian economy based on news from August 15-21, 2013. Key points include:
- Inflation is rising to a 5-month high due to fuel prices and food inflation. The rupee is devaluing against the dollar.
- The government has imposed restrictions on gold imports to curb the current account deficit.
- Tensions are rising between the government and RBI governor over monetary policy. The rupee continues falling despite measures.
- Onion prices have jumped back up due to low domestic supply, prompting the government to float a tender for onion imports.
The document discusses trends in the Indian economy from 2003-2010. It highlights that India experienced high growth driven by structural factors like favorable demographics, increasing urbanization, and rising foreign direct investment. It also notes that India's influence on the global economy is growing and that multinational companies are emerging from India. The document then outlines several sectors that are promising growth rates of over 10%, 15%, and 20% annually and states that McKinsey projects India's economy will grow to $1.76 trillion by 2025. Potential threats to growth mentioned include fluctuations in the rupee and oil prices, low FDI, and high inflation.
The document provides an overview of the global economic slowdown presented by Nishant Chhabra. It defines a slowdown as a reduction in GDP for at least two quarters and a recession as two consecutive quarters of negative GDP growth. It discusses causes of slowdowns like decreased consumer confidence leading to less spending. The US economy is discussed as consumption-based and impacted by the housing crisis and tightening credit. The global impacts are described, including effects on countries like India from decreased outsourcing and exports. Sectors facing slowdowns are also outlined such as manufacturing, real estate, banking, and exports. Corrective steps proposed include actions by the RBI, reducing taxes, and price drops in real estate.
India's GDP growth rate declined to a three-year low of 5.7% in the second quarter of 2017, losing India its status as the world's fastest growing major economy to China. This slowing was attributed to demonetization, GST implementation, and a broader slowdown in private investment, government spending, consumption, and net exports. Structural reforms are needed to boost exports and investment to support stronger GDP growth going forward.
The document summarizes the global economic crisis and its impact on India. It discusses how the subprime crisis originated from greed of investment bankers and failure of regulators. This led to a boom and speculation in the housing market. For India, about 30,000 IT jobs were impacted and IT revenues declined. The rupee sharply depreciated against other currencies. Foreign exchange reserves outflow increased. Investment flows and stock markets declined significantly. Exports contracted due to reduced global demand, impacting India's export-oriented economy and increasing unemployment. Inflation rose sharply in India as the central bank revised rates multiple times.
The document analyzes GDP components and economic factors of several countries. It finds that China and India have the highest growth potential after the US and are now the second and third largest economies worldwide. China, the US, Argentina, and Canada have higher savings than investment, indicating a current account deficit. The document recommends investing in India's services sector, which has strong 7.2% real GDP growth and a current account deficit that shows domestic market demand.
The document discusses the current state of the Indian economy and steps taken by the Reserve Bank of India to promote economic growth. It notes that the Indian economy is facing issues like high fiscal and current account deficits, lack of foreign investment, and inflation. The RBI has taken measures like raising borrowing limits for banks and allowing more foreign direct investment and external commercial borrowings to address high inflation, rupee depreciation, and boost investment. The document also analyzes the impacts of factors like global economic conditions, currency fluctuations, and policy reforms on the Indian economy.
To sustain 8% growth in the Indian economy and reach its full potential, additional foreign investment is needed, especially in infrastructure renewal and agriculture. Specifically, India needs around $20 billion per year in foreign direct investment for the next 10 years to support industrial and service sector exports as well as infrastructure projects. It should also welcome foreign institutional investment, while maintaining political and economic stability to retain such investments over the long term.
The document summarizes the current state of the Indian economy based on news from August 15-21, 2013. Key points include:
- Inflation is rising to a 5-month high due to fuel prices and food inflation. The rupee is devaluing against the dollar.
- The government has imposed restrictions on gold imports to curb the current account deficit.
- Tensions are rising between the government and RBI governor over monetary policy. The rupee continues falling despite measures.
- Onion prices have jumped back up due to low domestic supply, prompting the government to float a tender for onion imports.
The document discusses trends in the Indian economy from 2003-2010. It highlights that India experienced high growth driven by structural factors like favorable demographics, increasing urbanization, and rising foreign direct investment. It also notes that India's influence on the global economy is growing and that multinational companies are emerging from India. The document then outlines several sectors that are promising growth rates of over 10%, 15%, and 20% annually and states that McKinsey projects India's economy will grow to $1.76 trillion by 2025. Potential threats to growth mentioned include fluctuations in the rupee and oil prices, low FDI, and high inflation.
India's current account deficit widened significantly from 0% of GDP in 2007 to 4.92% of GDP in 2012, raising concerns among investors. The deficit was driven largely by a fall in domestic savings from 33.4% of GDP in 2005 to 30.4% in 2013, while investment levels remained similar. Corporate savings declined due to higher interest rates, while household financial savings fell as well due to negative real deposit rates. Large fiscal deficits also crowded out private investment. Increasing fiscal and current account deficits from 2008 to 2013 indicated a "twin deficits" problem. A growing current account deficit and macroeconomic vulnerabilities weakened India's growth outlook.
Principles of economics (growth paradox)Umar Sheikh
This document discusses economic principles including growth, inflation, fiscal deficit, and current account deficit. It provides statistics on growth rates in India, China, Indonesia, and the Philippines from 2016-2019. Inflation rates in India and China from 2011-2019 are also presented. The fiscal deficit of India from 2014-2019 and current account deficit of India from 2009-2019 are shown. The conclusion recommends investing in agriculture, increasing industrial output, focusing on technology and innovation, and increasing per capita income.
This report draws on over 10,000 interviews with business leaders as well as economic forecast data to better understand the growth opportunities and challenges facing dynamic companies over the next 12 months.
Challenges And Opportunities Of Globalisationloveleenchawla
Globalization: challenges and opportunities
Abstract:
Globalization is a multifaceted phenomenon. The paper identify some of the
Challenges it poses, as well as some of the opportunities it offers. Attention is focused on three major aspects of globalization namely economic, cultural, and political.
During 1990 to 2003, the volume of world trade has increased and the higher and middle-income countries managed to increase their share in world trade mainly due to the opening up of economies because of globalization. The middle-income countries had invited more Foreign Direct Investment during the period and the per capita GDP of the low-income countries was marginally increased. This resulted into the economic inequality, which widened between different income groups. In other words globalization has been confined to developed countries and developing countries were able to participate in the process.
However, globalization should not be accused for loosing share of the low-income countries. These countries suffered from internal problems like rapid rise in population, infrastructure bottlenecks, weak financial markets and so on.
Globalization and its benefits required a conducive environment to ensure higher returns and larger markets for foreign investors. To get a share of global capital, technology and output, developing countries had to upgrade their social and economic institutions through administrative, legislative and legal reforms.
Globalization merely provides opportunities to flourish. Globalization is not a tool to produce equality of outcome but it produces equality of opportunity for those with right mindset. Therefore developing countries require focusing on economic restructuring, developing market-supporting institutions and creating efficient regulatory mechanisms.
The low-income countries cannot survive at their own; they require international assistance and a support mechanism so as to facilitate their participation in the process of globalization. The challenge of the hour is to make globalization work towards global prosperity through disaggregate development. The critically necessity in this context are the collective and cooperative actions which should be realized by all countries of the world and particularly the developed ones.
The 1991 Indian balance of payments crisis occurred due to a combination of factors: a large current account deficit caused by rising oil prices after the Gulf War, declining exports, and a withdrawal of foreign capital. India's foreign exchange reserves fell dangerously low, forcing the government to undertake major economic reforms, including currency devaluation, trade liberalization, and industrial deregulation. In the following decades, these reforms helped stabilize the economy and shift to a market-oriented policy framework, leading to strong growth in foreign investment, exports, and overall macroeconomic indicators. However, some slowing was seen in the late 1990s due to global trade declines.
This document summarizes the key points from a presentation on the global economy, Indian economy, performance of corporations, types of risks, risk management process, growth strategies, operations management, organization structure, financial management, and reporting and monitoring. Some of the main points include that global growth is projected at 3.3% in 2013 and 4% in 2014, recovery has not been consistent in advanced economies, and there is increased volatility in asset markets. For India, growth potential has reduced to 8% from 10% due to structural changes, and inflation has impacted purchasing power. Risk management should focus on both qualitative and quantitative risks, and complement internal controls. Cash generation and conservation should be priorities for financial management.
The document summarizes the current state of the US economy. It notes that while growth has been slower than expected, unemployment is falling and inflation is under control. Housing and corporate investment are improving. The government is on track to reduce the deficit through spending cuts and tax increases. The economic recovery does not yet appear secure enough to withdraw stimulus, so a gradual withdrawal beginning in 2014 is recommended once unemployment and inflation targets are met.
Getting Rntervention Rights Rodrik Korean Economic DevelopmentSievleang Ly
The document discusses the economic growth of South Korea and Taiwan from the 1960s. It argues that their growth was not solely due to export promotion as conventional economics believes. While exports increased, profits from exports alone did not account for the aggregate economic performance. Rather, the main drivers were government intervention to remove coordination failures, investment-stimulating policies, and efficient industrial development. The governments coordinated private investments, encouraged exports through exchange rate policies, and imported capital goods which increased investment and exports together in a virtuous cycle. Initial conditions like education levels and equitable wealth distribution also contributed significantly to the countries' growth trajectories.
Last three decades has seen some interesting dynamics and realignments in economic influence of nations in the world. In particular, 3 Nations have a significant impact on wealth of nations and will continue to do so for foreseeable future. Here is their story as a visual essay.
It is a presentation of Bangladesh Studies,so here you will learn about how to growth up Bangladesh Economics from 1971.
Hopefully you will like this.
Thank you.
The document discusses India's current account deficit (CAD), which was $22.8 billion or 4.9% of GDP in 2013. A large CAD can drain foreign exchange reserves and cause the currency to depreciate. India's CAD is driven by gold and oil imports. Though coal imports have increased due to domestic shortages, reducing oil and coal imports is not feasible. Exports have fallen while FDI has declined from $35.12 billion in 2011 to $22.42 billion in 2012. A large CAD can force India to raise interest rates to attract foreign investment. The RBI has taken steps like raising FII limits and removing lock-in periods on government bonds to attract foreign inflows and contain the CAD
The Indian financial sector has been dominated by public sector ownership for decades. While reforms have increased private participation, government involvement remains significant through ownership of intermediaries, resource mobilization, and credit directives. This extensive government role has weakened incentives and increased moral hazard, undermining financial intermediation quality. Recent economic growth declines and investment stagnation indicate the financial sector is not effectively fulfilling its role in allocating savings.
This document summarizes a study that analyzes the relationship between domestic savings and economic growth in Nigeria from 1970 to 2006. It finds that while domestic savings as a percentage of GDP has generally been higher than investment, economic growth has remained low. It concludes that the main problem is not mobilizing savings, but rather the intermediation between savings and investment. It recommends that the government adopt policies to improve intermediation in the economy in order to enhance the link between savings and growth.
The document discusses the global recession of 2007-2009 and its impact on the Indian economy. It defines recession and global recession, describing the causes of the crisis in the US and how it impacted various sectors in India like IT, real estate, banking, exports and FDI. The recession led to falling stock markets, lower exports and IT jobs, and stalled real estate development. The government took steps to reduce taxes and interest rates to stimulate the economy. While India was still better off than many countries, most economic sectors felt significant effects from the global downturn.
The document compares foreign direct investment (FDI) in China and India, discussing their histories and government regulations. It notes that China rapidly grew its FDI through reforms in the 1970s-80s, while India imposed many restrictions until liberalizing in the 1990s. Key differences are that China attracted more manufacturing FDI while India focused on services, and India faces infrastructure and bureaucratic hurdles more than China. Both countries could improve FDI by reducing barriers and inefficiencies.
Presentation on Economics Growth of BangladeshJafor Sadik
The document discusses the economic growth of Bangladesh. It notes that Bangladesh has experienced average GDP growth of 5.4% in recent years, driven by development of microcredit and the garment industry. However, challenges remain including overpopulation, poor infrastructure, corruption, and political instability. Key constraints to improving growth are increasing export competitiveness, developing the financial sector, improving education and rural development, and investing in transportation infrastructure like roads, railways and inland waterways.
This document discusses the economy of Pakistan. It defines what an economy is and identifies key factors that affect Pakistan's economy such as growth, investment, agriculture, manufacturing, trade, debt, education, health, population, and employment. It also outlines some of Pakistan's economic challenges including consuming more than saving, importing more than exporting, high government spending, energy and water shortages, and weak governance. The economic history of Pakistan shows it was initially very poor but grew steadily from the 1960s-1980s before slowing in the 1990s. The major sectors of Pakistan's economy include agriculture, industry, automobiles, CNG, cement, IT, textiles, services, communication, and electricity. Key economic measures discussed include consumer
Industrial growth in Pakistan 2015: An OverviewAyesha Majid
Pakistan is improving as it has maintained the growth momentum and achievements are broad based touching all sectors of the economy. The growth recorded for 2014-15 is 4.24 percent and will further accelerate in coming years as business climate is improving on fast track with better growth oriented policies of the government.
Now situation is improving as the present government has launched comprehensive plan to create investment friendly environment & to attract foreign investors in the country. The investment policy has been designed to provide a comprehensive framework for creating a conducive business environment for the attraction of FDI. Private investment recorded in last year was Rs. 2,513 billion and it expanded to Rs. 2,645 billion for the fiscal year 2014-15.
This increase in private investment is the reflection that private investors are showing confidence on government policies and situation is improving.
Pakistan's economy grew by 5.8% in 2007-08, below the target of 7.2% due to weak performance in the agriculture and manufacturing sectors. GDP per capita grew significantly over the past six years due to rising remittances and economic growth. However, inflation increased to 10.3% while the current account deficit widened sharply. Overall the economy showed resilience despite challenges but fell short of targets on several fronts such as GDP growth and tax revenue collection.
The Economic Survey of India for 2017-19 summarizes the country's economic performance over the past year and provides projections for the coming year. It highlights India's temporary economic slowdown due to demonetization and GST implementation but expects growth to recover. The Survey also notes challenges like increasing investment and savings rates to achieve 8-10% growth, addressing income inequality, improving public services, and supporting the agricultural sector. Overall, the Survey presents an analysis of India's economy in the past year and a positive but cautious outlook for the coming year.
Dark clouds were gathering on the horizon for the Indian economy in 2020 according to the document. After a period of disruption and reset in the economic paradigm since 2019, growth was expected to remain below 6% with high inflation and volatility in the markets. Globally as well, economic growth was projected to slow down with increased uncertainties. The investment strategy recommended remaining risk averse with an underweight allocation to equities and overweight allocation to precious metals and debt.
India's current account deficit widened significantly from 0% of GDP in 2007 to 4.92% of GDP in 2012, raising concerns among investors. The deficit was driven largely by a fall in domestic savings from 33.4% of GDP in 2005 to 30.4% in 2013, while investment levels remained similar. Corporate savings declined due to higher interest rates, while household financial savings fell as well due to negative real deposit rates. Large fiscal deficits also crowded out private investment. Increasing fiscal and current account deficits from 2008 to 2013 indicated a "twin deficits" problem. A growing current account deficit and macroeconomic vulnerabilities weakened India's growth outlook.
Principles of economics (growth paradox)Umar Sheikh
This document discusses economic principles including growth, inflation, fiscal deficit, and current account deficit. It provides statistics on growth rates in India, China, Indonesia, and the Philippines from 2016-2019. Inflation rates in India and China from 2011-2019 are also presented. The fiscal deficit of India from 2014-2019 and current account deficit of India from 2009-2019 are shown. The conclusion recommends investing in agriculture, increasing industrial output, focusing on technology and innovation, and increasing per capita income.
This report draws on over 10,000 interviews with business leaders as well as economic forecast data to better understand the growth opportunities and challenges facing dynamic companies over the next 12 months.
Challenges And Opportunities Of Globalisationloveleenchawla
Globalization: challenges and opportunities
Abstract:
Globalization is a multifaceted phenomenon. The paper identify some of the
Challenges it poses, as well as some of the opportunities it offers. Attention is focused on three major aspects of globalization namely economic, cultural, and political.
During 1990 to 2003, the volume of world trade has increased and the higher and middle-income countries managed to increase their share in world trade mainly due to the opening up of economies because of globalization. The middle-income countries had invited more Foreign Direct Investment during the period and the per capita GDP of the low-income countries was marginally increased. This resulted into the economic inequality, which widened between different income groups. In other words globalization has been confined to developed countries and developing countries were able to participate in the process.
However, globalization should not be accused for loosing share of the low-income countries. These countries suffered from internal problems like rapid rise in population, infrastructure bottlenecks, weak financial markets and so on.
Globalization and its benefits required a conducive environment to ensure higher returns and larger markets for foreign investors. To get a share of global capital, technology and output, developing countries had to upgrade their social and economic institutions through administrative, legislative and legal reforms.
Globalization merely provides opportunities to flourish. Globalization is not a tool to produce equality of outcome but it produces equality of opportunity for those with right mindset. Therefore developing countries require focusing on economic restructuring, developing market-supporting institutions and creating efficient regulatory mechanisms.
The low-income countries cannot survive at their own; they require international assistance and a support mechanism so as to facilitate their participation in the process of globalization. The challenge of the hour is to make globalization work towards global prosperity through disaggregate development. The critically necessity in this context are the collective and cooperative actions which should be realized by all countries of the world and particularly the developed ones.
The 1991 Indian balance of payments crisis occurred due to a combination of factors: a large current account deficit caused by rising oil prices after the Gulf War, declining exports, and a withdrawal of foreign capital. India's foreign exchange reserves fell dangerously low, forcing the government to undertake major economic reforms, including currency devaluation, trade liberalization, and industrial deregulation. In the following decades, these reforms helped stabilize the economy and shift to a market-oriented policy framework, leading to strong growth in foreign investment, exports, and overall macroeconomic indicators. However, some slowing was seen in the late 1990s due to global trade declines.
This document summarizes the key points from a presentation on the global economy, Indian economy, performance of corporations, types of risks, risk management process, growth strategies, operations management, organization structure, financial management, and reporting and monitoring. Some of the main points include that global growth is projected at 3.3% in 2013 and 4% in 2014, recovery has not been consistent in advanced economies, and there is increased volatility in asset markets. For India, growth potential has reduced to 8% from 10% due to structural changes, and inflation has impacted purchasing power. Risk management should focus on both qualitative and quantitative risks, and complement internal controls. Cash generation and conservation should be priorities for financial management.
The document summarizes the current state of the US economy. It notes that while growth has been slower than expected, unemployment is falling and inflation is under control. Housing and corporate investment are improving. The government is on track to reduce the deficit through spending cuts and tax increases. The economic recovery does not yet appear secure enough to withdraw stimulus, so a gradual withdrawal beginning in 2014 is recommended once unemployment and inflation targets are met.
Getting Rntervention Rights Rodrik Korean Economic DevelopmentSievleang Ly
The document discusses the economic growth of South Korea and Taiwan from the 1960s. It argues that their growth was not solely due to export promotion as conventional economics believes. While exports increased, profits from exports alone did not account for the aggregate economic performance. Rather, the main drivers were government intervention to remove coordination failures, investment-stimulating policies, and efficient industrial development. The governments coordinated private investments, encouraged exports through exchange rate policies, and imported capital goods which increased investment and exports together in a virtuous cycle. Initial conditions like education levels and equitable wealth distribution also contributed significantly to the countries' growth trajectories.
Last three decades has seen some interesting dynamics and realignments in economic influence of nations in the world. In particular, 3 Nations have a significant impact on wealth of nations and will continue to do so for foreseeable future. Here is their story as a visual essay.
It is a presentation of Bangladesh Studies,so here you will learn about how to growth up Bangladesh Economics from 1971.
Hopefully you will like this.
Thank you.
The document discusses India's current account deficit (CAD), which was $22.8 billion or 4.9% of GDP in 2013. A large CAD can drain foreign exchange reserves and cause the currency to depreciate. India's CAD is driven by gold and oil imports. Though coal imports have increased due to domestic shortages, reducing oil and coal imports is not feasible. Exports have fallen while FDI has declined from $35.12 billion in 2011 to $22.42 billion in 2012. A large CAD can force India to raise interest rates to attract foreign investment. The RBI has taken steps like raising FII limits and removing lock-in periods on government bonds to attract foreign inflows and contain the CAD
The Indian financial sector has been dominated by public sector ownership for decades. While reforms have increased private participation, government involvement remains significant through ownership of intermediaries, resource mobilization, and credit directives. This extensive government role has weakened incentives and increased moral hazard, undermining financial intermediation quality. Recent economic growth declines and investment stagnation indicate the financial sector is not effectively fulfilling its role in allocating savings.
This document summarizes a study that analyzes the relationship between domestic savings and economic growth in Nigeria from 1970 to 2006. It finds that while domestic savings as a percentage of GDP has generally been higher than investment, economic growth has remained low. It concludes that the main problem is not mobilizing savings, but rather the intermediation between savings and investment. It recommends that the government adopt policies to improve intermediation in the economy in order to enhance the link between savings and growth.
The document discusses the global recession of 2007-2009 and its impact on the Indian economy. It defines recession and global recession, describing the causes of the crisis in the US and how it impacted various sectors in India like IT, real estate, banking, exports and FDI. The recession led to falling stock markets, lower exports and IT jobs, and stalled real estate development. The government took steps to reduce taxes and interest rates to stimulate the economy. While India was still better off than many countries, most economic sectors felt significant effects from the global downturn.
The document compares foreign direct investment (FDI) in China and India, discussing their histories and government regulations. It notes that China rapidly grew its FDI through reforms in the 1970s-80s, while India imposed many restrictions until liberalizing in the 1990s. Key differences are that China attracted more manufacturing FDI while India focused on services, and India faces infrastructure and bureaucratic hurdles more than China. Both countries could improve FDI by reducing barriers and inefficiencies.
Presentation on Economics Growth of BangladeshJafor Sadik
The document discusses the economic growth of Bangladesh. It notes that Bangladesh has experienced average GDP growth of 5.4% in recent years, driven by development of microcredit and the garment industry. However, challenges remain including overpopulation, poor infrastructure, corruption, and political instability. Key constraints to improving growth are increasing export competitiveness, developing the financial sector, improving education and rural development, and investing in transportation infrastructure like roads, railways and inland waterways.
This document discusses the economy of Pakistan. It defines what an economy is and identifies key factors that affect Pakistan's economy such as growth, investment, agriculture, manufacturing, trade, debt, education, health, population, and employment. It also outlines some of Pakistan's economic challenges including consuming more than saving, importing more than exporting, high government spending, energy and water shortages, and weak governance. The economic history of Pakistan shows it was initially very poor but grew steadily from the 1960s-1980s before slowing in the 1990s. The major sectors of Pakistan's economy include agriculture, industry, automobiles, CNG, cement, IT, textiles, services, communication, and electricity. Key economic measures discussed include consumer
Industrial growth in Pakistan 2015: An OverviewAyesha Majid
Pakistan is improving as it has maintained the growth momentum and achievements are broad based touching all sectors of the economy. The growth recorded for 2014-15 is 4.24 percent and will further accelerate in coming years as business climate is improving on fast track with better growth oriented policies of the government.
Now situation is improving as the present government has launched comprehensive plan to create investment friendly environment & to attract foreign investors in the country. The investment policy has been designed to provide a comprehensive framework for creating a conducive business environment for the attraction of FDI. Private investment recorded in last year was Rs. 2,513 billion and it expanded to Rs. 2,645 billion for the fiscal year 2014-15.
This increase in private investment is the reflection that private investors are showing confidence on government policies and situation is improving.
Pakistan's economy grew by 5.8% in 2007-08, below the target of 7.2% due to weak performance in the agriculture and manufacturing sectors. GDP per capita grew significantly over the past six years due to rising remittances and economic growth. However, inflation increased to 10.3% while the current account deficit widened sharply. Overall the economy showed resilience despite challenges but fell short of targets on several fronts such as GDP growth and tax revenue collection.
The Economic Survey of India for 2017-19 summarizes the country's economic performance over the past year and provides projections for the coming year. It highlights India's temporary economic slowdown due to demonetization and GST implementation but expects growth to recover. The Survey also notes challenges like increasing investment and savings rates to achieve 8-10% growth, addressing income inequality, improving public services, and supporting the agricultural sector. Overall, the Survey presents an analysis of India's economy in the past year and a positive but cautious outlook for the coming year.
Dark clouds were gathering on the horizon for the Indian economy in 2020 according to the document. After a period of disruption and reset in the economic paradigm since 2019, growth was expected to remain below 6% with high inflation and volatility in the markets. Globally as well, economic growth was projected to slow down with increased uncertainties. The investment strategy recommended remaining risk averse with an underweight allocation to equities and overweight allocation to precious metals and debt.
The current crisis is unprecedented in the sense that it has seriously impacted the liquidity, solvency and viability of a large number of businesses, all at the same time. The only way out of this crisis is to inflate a colossal bubble in asset prices, which is equally unprecedented. A global bubble will inflate in healthcare sector. far bigger and durable than the dotcom and subprime bubbles, as it deals with human lives directly. The politicians, bankers, investors, policy makers, administrators, businessmen, consumers et. al. who have spent weeks locked down in their houses fearing for their lives while watching the death statistics on media, would readily accept the need for much higher investment and spending on healthcare. In that sense, this bubble will be far more tangible, believable, acceptable and inflatable.
Based on our scuttlebutt and feedback from industry sources and ground views of experts regarding the current state of affairs in India due to Coronavirus lockdown, We shall now present our thoughts on investment strategy for post lock down period.
Indias great slowdown cause and way forward by arvind subramanian and josh fe...DVSResearchFoundatio
The Indian economy is facing a Severe Slowdown with the GDP growth falling to 4.5% in the 2nd Quarter of FY19-20. Mr. Aravind Subramanian, former Chief Economic Adviser to the Government of India has termed it as The Great Slowdown. A recent Faculty Working Paper (WP) for the Center for International Development (CID) at Harvard University by Mr. Arvind Subramanian and Mr. Josh Felman provides an Analysis of the Slowdown. In this webinar, we shall understand the thesis provided on Reasons and Remedies for the Current Slowdown.
- The document discusses emerging markets, focusing on India and China. It argues that while China's economy is slowing due to factors like a housing bubble and overcapacity, India's economy remains strong, as evidenced by positive manufacturing and services data as well as macroeconomic stability.
- The Indian budget aims to further boost the economy through tax cuts, infrastructure spending, and reforms. With its favorable demographics and policies under Modi, India has strong long-term growth potential and opportunities for investors.
- While the Indian stock market may be overpriced, now could be a good time for entry due to the country's economic resilience and promising outlook. The document recommends sectors like banking and construction.
India is a good long term stuctural storyNikhil Kadu
Foreign institutional investors see India as a good long-term investment opportunity. While recent foreign fund flows into India have been sizable, foreign investors still mainly favor a small number of large stocks. The Indian economy faces both internal and external challenges, but the risk of a sovereign debt crisis in the near future is viewed as minimal provided deficits are managed responsibly and growth increases. Some volatility is expected in markets due to upcoming elections and the US tapering its monetary stimulus.
The document discusses the strong macroeconomic fundamentals and economic growth of the Philippines in recent years. It notes that GDP growth has accelerated to over 5% annually despite natural disasters, driven by robust private consumption, investment, and growth in the manufacturing and services sectors. Inflation has remained low and stable between 3-5% while interest rates are historically low. The stock market and competitiveness rankings have also improved significantly in recent years according to various reports. However, challenges remain in generating higher and more inclusive economic growth through productivity gains and better job creation.
This document contains a case study submitted by a group on the topic of China's unbalanced economy. It includes a PESTLE analysis of China and discusses several factors driving China's rapid growth after 1978, including reforms, population control policies, growth of rural industries and special economic zones, and attracting foreign direct investment. It also examines questions around whether and when China may overtake the US as the largest economy, threats to continued Chinese growth and how leadership should respond, whether India may overtake China, analyzing China's current economic situation in 2018, and how an Indian company can take advantage and grow its business with China.
Ppt on measures to curb continuning slide of rupeeCA Deepak Sharma
The Indian rupee has depreciated significantly against the US dollar, touching record lows. This is due to a high current account deficit driven by high imports, lower foreign capital inflows, and lower economic growth. To arrest the slide of the rupee, measures are needed to control the current account deficit by curbing non-essential imports and boosting exports. Measures are also needed to increase foreign capital inflows by improving the investment environment and easing capital controls. Additionally, reviving economic growth through policy execution and anti-corruption efforts can help. Overall, stabilizing the global economic outlook will also impact the rupee. Controlling imports and increasing foreign investment are expected to positively impact Indian trade.
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2. Agenda
Introduction: Emerging markets slowdown
India heading for a major slowdown
How India got here?
India‟s Financial stability at risk
Where is the INR currency headed?
Macro-economic models to Assess India
Conclusion & Investment Implications
3. Third leg of the 2008 Great recession
• Current slowdown in emerging markets including China is effectively
the onset of the third leg of the great crisis of 2008 which started in
US, then spreading to Europe and finally to emerging markets now.
• Many emerging mkts. including India only managed to postpone the
painful process of adjusting output and imports to the new low growth
global economy post 2008, by orchestrating huge stimulus programs.
Emerging economies giving
up all the stimulus led
growth gains post 2008
financial crisis.
4. The visible hand of QE
• The Unending QE programs also helped delay as well as worsen the
eventual slowdown in emerging markets by pumping cheap capital
into unproductive areas with low ROI, thereby building asset
bubbles.
• Finally, the talk to tapering in US has lead to a sense of reality
within the global investor community, unraveling the whole
emerging markets growth story.
For a variety of reasons discussed in this presentation, India looks
one of the most vulnerable of the lot.
5. Myth of emerging markets decoupling
• Huge latent domestic demand was quoted even post 2008 as a reason for
emerging markets decoupling without addressing how it will be paid for.
• There are still scores of people below poverty line in many of these
countries and strong exports are essential for a long period of time to
transform into anything like a consumer driven economy.
• With developed markets(erstwhile engines of global growth) stuck in a
deflationary spiral, who will consume the glut of exports from these
markets?
• No historical precedent of countries achieving sustainable economic
growth for long periods of time solely based on internal demand.
With virtually every country globally wanting to boost exports,
will this lead to rise of Imperialism once again.
6. Global Forex reserve growth slowing
pointing to a global slowdown in trade
Source: CLSA
7. Large current account deficit:
A potent warning signal to a crisis
• As per IMF research, Current account deficit as a % of GDP over 5% is
usually the “tipping point” after which it becomes very difficult to recover
without a major deflationary crisis.
• Critically important is an evaluation of what the deficit is being used for
and how it is being funded.
• In India‟s case, the deficit is primarily funded by volatile portfolio flows
for private consumption purposes, raising a red flag.
Most Asian countries, barring India & Indonesia well positioned compared
to 1997 crisis.
8. Current account deficit (as a % of GDP)
US Crossed 5% in 2005, almost 2.5
years before the financial crisis hit
Many of the worst hit EU nations in recent times also ran
CADs over 5% before the crisis hit
9. Asset price deflation:
only way to rebalance economy?
Asset price deflation in US and Eurozone post 2008 crisis
helped bring back current account deficit under control
United
States
Euro
Zone
10. India’s Current account deficit:
At an all time high
Perilously close to 5% level currently
Does India need to undergo a similar major asset price deflation to
rein in the current account deficit?
11. India heading towards a major slowdown
India
slowdown
Low
export
base
High CAD
Rising
NPAs
Falling
INR
High
Fiscal
deficit
High
External
debt
High
Inflation
Portfolio
outflows
Negative
Real
rates
A major deflationary crisis
looming with hardly any policy
tools left to engineer a soft-
landing
India doesn‟t seem to be in the
same boat as many other emerging
mkts. facing the brunt of QE
tapering
India‟s problems are more
structural than cyclical in
the current stagflation state
12. How did India Get here?
Populist politics & the curse of the Welfare programs
Lack of reforms and loss of business confidence
Ineffective Monetary policy
Stagflation turning
into a
Deflationary crisis
13. The curse of the Welfare Programs
• India made the fatal mistake of starting a welfare program called MG-
NREGA, guaranteeing minimum wages and employment in the very
early stages of economic development.
• In Hindsight, the NREGA was effectively a money printing exercise
without a meaningful increase in productivity levels.
• It not only added to India‟s fiscal woes but also made our exports
uncompetitive by setting off a vicious wage-spiral amidst huge supply
constraints which were never addressed.
• India increasingly looked for cheaper imports even in basic manufactured
goods segment to satiate its increased artificial demand created by
printing money.
Populist politics derailed the India growth story
14. India’s structural CAD problem
worsened in the last two years!
Monthly Trade balance
Imports
Exports
Source: Reuters
Indian exports steadily becoming
uncompetitive
15. Exports languishing despite weak INR
• Did not see any major pickup in exports in the face of substantial
depreciation in exchange rate in the last two years.
• The advantage seem to have been potentially offset by high inflation,
bad business climate and low export base.
• This points to serious structural problems underlying the CAD crisis
16. INR Depreciation may not boost exports
instantly-A look at last year’s EXIM profile
• The top two exports represent little value addition to the imported raw
materials.
• Rupee depreciation seems to cut both ways in many items of trade and hence
would not lead to a cyclical spurt in exports
**Source: The Guardian
17. India’s Export destination profile
also Raises a Red flag!
Close to 50% of India’s exports are sold in Asia itself. The ongoing
emerging markets slowdown in Asia poses a constraint to hopes of
immediate pickup in exports on the back of weak rupee.
**Source: The Guardian
18. Not much respite coming from India’s
strength in IT-ITES exports either
• Global slowdown in IT spending, tightening outsourcing rules and visa
restrictions in the US slowing down India‟s IT export growth.
• India also suffered from loss of competitiveness to countries like Philippines
which nibbled away at the low-end IT and voiced-based services.
Annual % growth in software exports in dollar terms: BOP basis
**Source: RBI
19. Exhaustion of Fiscal flexibility!
• A fiscal deficit of over 3% of GDP is considered as a source of
vulnerability.
• Large fiscal stimulus during 2008 crisis amidst weak global demand,
along with various fuel subsidies, and welfare programs which were
already in place severely constrained India‟s fiscal position.
• Proposed food bill, Current slowdown and currency stabilizing
measures might compromise this year‟s fiscal target of 4.8% GDP,
risking a sovereign downgrade
• Limited fiscal room for any potential bank recapitalization
requirements-A major worry!
• Not in a position to engineer 2008 type fiscal stimulus to boost
growth in 2013.
20. Lack of reforms and loss of
business confidence
• Continued policy paralysis of the current Government has been the key
feature derailing the India growth story.
• Incessant corruption at massive scale and absence of political will to
enact the much needed supply side reforms led to this crisis situation.
• Ad-hoc reforms were only implemented when pushed to the wall.
• Business confidence among corporates has been on a downtrend with
more and more companies quoting increasingly difficult conditions to
do business in India.
Major Indian corporates houses like Tata Sons, Aditya Birla, Bharti,
Piramal group, Apollo tires etc. going for international growth at the
expense of growth back home has been a leading indicator to this crisis!
21. Deteriorating local business confidence
Weak demand and rising input costs hurting business
confidence-Stagflation scenario
22. Broad based, steady decline in IIP,
Manufacturing & services PMI indices
IIP
Capital goods
Basic goods
Intermediate goods
23. Ineffective Monetary policy
• Monetary policy in the last few years only managed to play catch-up with
populist politics running very high fiscal deficit.
• The focus of RBI continued to remain mostly on Wholesale price inflation,
underplaying the CPI inflation, quoting supply constraints.
• However, in hindsight it is quite clear now that CPI inflation played a
pivotal role in bringing down the country‟s growth level and external
economic balance.
• CPI inflation even today continues to hover around double digit levels,
feeding wage inflation & excess gold and oil demand leading to high CAD.
In the context of such populist politics and lack of supply reforms, RBI
should have enacted the only option left, of implementing Volker type
monetary policy in 1980’s to stabilize the economy
24. Wholesale & Manufacturing Inflation
moderating with GDP slowdown
Manufacturing inflation
WPI Inflation
26. Whereas Consumer price inflation remains high
WPI primary inflation
Food inflation
Fuel inflation
CPI
Source: Reuters
High CPI inflation close to double digits kept India’s real rates negative
for a long time now. With US real yields turning positive, there is a massive
capital outflow chasing real yields.
27. Negative Real rates boosting gold imports
• The concept of Gold as
a store of value seems
to have gotten
entrenched in Indian
consumers mind set,
owing to negative real
rates for an extended
time now.
• The negative real rates
have also led to a clear
downtrend in the bank
deposits growth rate.
• Household saving rate
in India back to 1990
levels(7.8%of GDP).
Three-year moving average rate of
growth in bank deposits
* Source: RBI
28. Gold Prices in INR resilient
• Current Gold price continues to hover around 2012 highs despite
30% drop in International gold prices due to currency weakness.
• India‟s CAD is under pressure not only because of the record high
gold price but also because of the incessant increase in import
quantity year after year.
* Source: RBI
29. India has been slow in making oil demand
elastic, pressurizing current account
30. India’s External debt at an all time high
• Increase mainly on account of corporate borrowing through ECBs.
• Around $170B of this external debt is up for redemption in the next
one year, making India and its corporates highly vulnerable to
further currency depreciation.
31. Financial stability at risk with rising NPAs
Non-performing Assets and restructured loans of banks as well as NBFCs
have been going up for the last two years due to slowdown in the economy.
According to S&P, India's banking sector's Gross NPA ratio is likely to surge
to 3.9 per cent in 2013-14 and to 4.4 per cent in 2014-15, compared with 3.4
per cent in fiscal 2012-13.
** Source: RBI Restructured loans as % of Total loans
32. India has a weak BOP profile
-6000
-4000
-2000
0
2000
4000
6000 1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Current account Capital account
Rs.InBillion
-4000
-2000
0
2000
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Consistent drawdown of Reserve assets to avert BOP crisis
Rs.InBillion
India highly vulnerable to speculative Currency attacks
& Risk off global market environment
FDI constitutes hardly 15-25% of Capital
account, signifying the capital account vulnerability
33. Falling Import cover to just 7 months
High External debt and potential need for state banks recapitalization
have to be factored in before taking comfort in adequate import cover
34. Application of Major Economic Models to India
• Applying a few prominent Macro-economic models to India, will
help us in:
Understanding the current state of the economy.
Determining the possible policy options available.
Depicting the impact of such policy actions on the future path of
the economy.
Models Used for this analysis include:
1. BB-NN model to understand the economy’s current state and
destination point.
2. AS-AD model to address the supply-demand equilibrium in the
economy
3. IS-LM model to understand the possible policy actions and their
impact
35. BB-NN Model to determine State of economy
BB line depicts the economy‟s external balance(deficit/surplus) and NN line
depicts its internal balance. P-line represents the social peace level or wage
levels in economy. X-axis shows the output level and Y-axis shows increasing
competitiveness in wages.
36. BB-NN Model to determine State of economy
BB line depicts the economy‟s external balance(deficit/surplus) and NN line
depicts its internal balance. P-line represents the social peace level or wage
levels in economy. X-axis shows the output level and Y-axis shows increasing
competitiveness in wages.
India reached „state-1‟ in this model by running inflationary high deficits
consistently leading to higher wages and consumption, thereby moving social
peace line down to a new equilibrium level P‟.
1
P’
37. BB-NN Model to determine State of economy
India thus reached the populist point and is being forced to move to IMF
point to rebalance its economy, which is inherently deflationary.
In the process, moving the social peace line back up with financial repression
is not a politically easy option, which will make this transition painfully slow
and could lead to further downside risks to the economy.
38. AS-AD Model to understand Supply-Demand
equilibrium in the economy
AS curve depicts supply capacity
and AD line depicts demand level.
India currently at state-1,where
AD still crosses AS at an elevated
inflation generating level.
Y
AS
AD
P
1
39. AS-AD Model to understand Supply-Demand
equilibrium in the economy
AS curve depicts supply capacity
and AD line depicts demand level.
India currently at state-1,where
AD still crosses AS at an elevated
inflation generating level.
Of course, the best option is to
reduce price level by increasing
supply, pushing AS curve down to
reach state-2.
Y
AS
AD
P
AS’
1
2
40. AS-AD Model to understand Supply-Demand
equilibrium in the economy
AS curve depicts supply capacity
and AD line depicts demand level.
India currently at state-1,where
AD still crosses AS at an elevated
inflation generating level.
Of course, the best option is to
reduce price level by increasing
supply, pushing AS curve down to
reach state-2.
Y
AS
AD
P
AS’
AD’
1
3
However, owing to the slow supply reform process and deterioration in
business confidence, India has to bite the bullet and shift the AD curve down
by curbing CPI inflation to balance CAD in the short run to reach state-3.
41. IS-LM model to understand the path of the economy
Y
IS
LMI
If+α
1
• The IS-LM model demonstrates
the relationship between interest
rates and real output
• X-Axis represents Output
• Y-axis represents Interest level.
• „IS‟ line is representative of Fiscal
changes.
• „LM‟ line is representative of
Monetary Changes.
• „If+α‟ is the interest state line
where „If‟ is global risk free rate
and „α‟ represents country risk.
42. IS-LM model to understand the path of the economy
Y
IS
LMI
If+α
1
If‟+α‟
• India is in state 1 until
recently, towards the left end in
the model with low output and
high interest rates( Stagflation).
• Fiscal deficit already too high to
engineer any fiscal stimulus and
unable to provide further monetary
stimulus in the face of high
inflation and weak currency to
kick start growth.
• Is at a state where it needs to bring
down inflation further and control
imports to restart growth.
• As a result „α‟ increased and talk
of tapering in US increased „If‟
simultaneously.
43. IS-LM model to understand the path of the economy
Y
IS
LMI
If+α
1
If‟+α‟
LM‟
2
IS‟
• India being a relatively flexible
exchange rate regime, when „If+α‟
moves up, money flows flow
weakening the exchange rate. This
should boost exports and the „IS‟
line should move up in general.
• However, since our export base is
low, with structural problems , „IS‟
will not move up instantly.
• Instead RBI will have to move
„LM‟ line up to defend the
currency and control imports to
balance Current account.
• This takes us to State 2 and India
is currently in the process of
getting to state 2.
44. IS-LM model to understand the path of the economy
Y
IS
LMI
If+α
1
If‟+α‟
LM‟
2
IS‟
3
• As a result, in state 2, output is still
lower with higher interest rates.
• This stagflation state will slowly
transform into a deflationary state.
Hence this is the right time to make
a “High Duration Bond investment
in India”.
• Eventually India will regain
competitiveness slowly by deflation
and „LM‟ line will move back and
„IS‟ line will move up to state
3, with higher output and lower
rates.
• However, due to the severe
structural problems, state 2 to state
3 transformation could be painfully
slow-A multi-year bull market in
Long duration bonds
45. INR lost a staggering 50% in 2 years
• Source: Bloomberg
46. Rupee could bottom out between 65-70/$
• REER was overvalued prior to recent devaluation: REER usually is in a band of
95-105.
• Based on provisional RBI data, Rupee is a good value buy now!!
6-currency REER is close to undervalued levels signaling a bottom between 65-70/$.
36-currency REER already overshot into undervalued territory.
• However any further spike in inflation could unleash lower levels.
• Also have to note the limitation of this analysis to predict levels in a full blown
crisis.
85
90
95
100
105
110
115
2004-05
2007-08
2010-11
2013-14
Year
Trade based - REER (2004-05)
36-currency 6-currency
Sources: RBI,CMIE
47. Conclusion
From this analysis, it is quite clear that India is heading towards a
major multi-year slowdown with very few policy tools left to
stimulate growth or engineer a soft-landing.
Austerity looks to be the only way out of this crisis which is
inherently deflationary.
With a low export base, India needs to immediately clamp down on
imports by hiking fuel prices, import duties and interest rates
further to balance the current account and bring normalcy to the
currency markets.
And carry out structural reforms to rebalance the economy in the
medium to long term
48. Investment Implications
In this context, Equity market valuations will have to adjust to the new
low growth dynamics by moving much lower from the current levels.
Interest rate markets also might see much more pain in the near
term, esp. the short end of the curve from potential rate hikes.
However the long end of the curve provides sufficient margin of safety
(around 250 bps) from rate hikes. A major inversion of the yield curve is
also expected sooner rather than later.
Overall the Indian bond market looks set for a multi-year secular bull
market of the kind we saw till 2005.
In this context, the long duration bonds at 9-10% yield within INR 65-
70/$ range offer significant value from a 2-3 year perspective.