Category: Economy

On October 7, Prime Minister Narendra Modi emphasised the importance of the Maldives in India’s ‘Neighbourhood First’ policy at a meeting with Maldivian President Mohamed Muizzu in New Delhi. Modi emphasised India’s consistent support, citing previous help provided to the Maldives during emergencies, such as vital commodities, drinking water during natural catastrophes, and COVID-19 vaccines.

Modi emphasised that development cooperation remains critical to India-Maldives relations. He announced a $100 million rollover by the State Bank of India for the Maldivian Treasury, as well as a $400 million and ₹3,000 crore currency swap agreement. “We have committed to comprehensive support for Maldives’ infrastructure development,” he said.

To strengthen economic connections, Modi cited the completion of over 700 social housing units built with Indian assistance and declared plans to pursue a free trade agreement. He also stated that India and the Maldives would soon join via the Unified Payments Interface (UPI), following the successful launch of RuPay cards in the Maldives.

The leaders also discussed security cooperation, with Modi highlighting the continuing work on the Ekatha Harbour project and India’s commitment to strengthening the Maldivian National Defence Forces. He reaffirmed India and the Maldives’ commitment to working together for regional peace and prosperity.

Minister of Commerce and Industry Piyush Goyal met with American business magnates in New York on Thursday to promote investments in India. Executives like Robert Goldstein (COO of BlackRock), Anup Popat (CEO of Systems Technology Group), Sanjiv Ahuja (CEO of Tillman Holdings), Shailesh Upreti (CEO of C4V), and Ali Dibadj (CEO of Janus Henderson Investors) were among those he met with. Goyal highlighted changes to increase infrastructural development and the ease of doing business, emphasising India’s potential as a worldwide manufacturing base.

Goyal highlighted the government’s commitment to strengthening the manufacturing and intellectual property rights sectors through various incentive programs. Investments under production-linked incentive (PLI) schemes, he said, may achieve Rs 2 lakh crore, up from an earlier estimate of 850,000, and 1.2 million direct jobs. This is in addition to the fact that they could surpass the initial projection of Rs 1.32 lakh crore.

Previously, while in Australia, Goyal encouraged Australian pension funds to engage in renewable energy, fintech, and agritech. He met with Tania Constable, CEO of Australia’s Minerals Council to establish closer ties in vital minerals. While meeting with Joel Katz of the CLIA and Robin Khuda, CEO of AirTrunk, Goyal addressed coastal tourism and explored digitalisation potential.

According to figures provided by the central bank on Friday, India’s foreign exchange (FX) reserves have been steadily increasing over the past six weeks, reaching a new high of $692.3 billion as of September 20. A significant overall gain of $19.3 billion has been recorded over the past five weeks, with an additional $2.84 billion added during the most recent reporting week.

The interventions in the foreign exchange market by the Reserve Bank of India (RBI) to control the rupee’s excessive volatility and the appreciation or depreciation of foreign assets kept in reserves are the main causes of the variations in foreign currency assets. During that time, the U.S. Federal Reserve dropped interest rates by 50 basis points, and local stock and bond markets saw increased inflows, helping the rupee achieve its best week of 2024.

The rupee gained over 0.4% week-on-week last week, hitting a two-month high of 83.4850. The local currency had a small weekly decline of 0.1% as of Friday, settling at 83.70.

The United States’ economic growth accelerated in the second quarter, owing mostly to strong consumer spending, the Commerce Department reported on Thursday. The GDP expanded at an annualised rate of 3.0%, which was unchanged from the prior estimate. According to economists, this was consistent with forecasts. In contrast, growth in the first quarter was revised to 1.6%, up from the previously reported 1.4% rate.

The government corrected the national account statistics from the first quarter of 2019 to the first quarter of 2024. This indicated that economic growth and business earnings in 2023 were better than the previous estimate. GDI was one where an adjustment was made as part of these changes. GDI, a measure of income-related activity, rose at a 3.4% rate in the second quarter, an important revision from 1.3% previously reported. GDI for the first quarter was also revised higher to 3.0%.

Economists have signalled an alarm over the divergence between GDP and GDI, which they say is a sign of inflation in measuring the economy’s health. Yet its adjustments lower that gap. The Gross Domestic Output average of GDP increased by 3.2% in the second quarter, more than 2.1%.

Indonesia has officially applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to expand its export markets and attract more investment. On Wednesday, Indonesia’s national news agency, Antara, reported on the important decision, citing the country’s main economic minister, Airlangga Hartarto.

According to Hartarto, Indonesia addressed a formal letter to New Zealand, the CPTPP’s depositary. The letter underlines Jakarta’s desire to join the agreement that connects 12 member countries. “This decision is part of our efforts to structurally reform Indonesia’s economy and expand market access globally,” Hartarto informed the crowd.

Indonesia has already shown interest in joining the CPTPP in May, seeing it as a strategic opportunity to spur investment and expand market penetration. Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United Kingdom, and Vietnam are currently members of the trade agreement.

Airlangga further stated that Indonesia’s President-elect, Prabowo Subianto, is fully supportive of the effort. Prabowo will succeed the current president, Joko Widodo, in October. The CPTPP was initially signed in March 2018 and went into force later that year. The United Kingdom requested entry to the accord in 2021 and joined in 2023.

India has now surpassed Japan to become Asia’s third most powerful country, according to the Lowy Institute’s most recent Asia Power Index. This shift demonstrates India’s growing strength on the continent, cementing its position as a global player with aspirations to become a superpower.

The Asia Power Index, published annually by Australia’s Lowy Institute, assesses countries’ power dynamics throughout Asia using variables such as economic resources, military strength, diplomatic influence, and cultural reach. India’s ascension reflects its expansion in strategic areas such as defence, diplomacy, and economic growth.

Rapid technological advancements and initiatives like “Make in India” and “Atmanirbhar Bharat” have been crucial to India’s economic growth. Its investment in modern military infrastructure, such as upgraded missile systems and a larger naval presence, has strengthened its regional security position.

India’s diplomatic power has also expanded as a result of its active engagement in international alliances such as the United Nations, G20, and the Quad.

While Japan remains a significant economic and technological powerhouse, slow population growth and limited military expansion have contributed to its decrease in regional influence. India’s potential for global superpower status is obvious, but difficulties such as income disparity and geopolitical concerns persist.

Hardeep Singh Puri, India’s Petroleum Minister, claimed that bilateral trade between India and the United States has the potential to exceed $500 billion, up from $200 billion currently. He underlined that the United States is currently India’s sixth-largest energy trade partner, with hydrocarbon trade expected to reach $13.6 billion in 2023-24, nearly doubling that of 2018-19. This increased momentum shows that there is substantial potential for future trade expansion.

Puri made these comments during a panel at Gastech 2024, a global energy conference. He spoke with stakeholders from the US-India Business Council, the US-India Strategic Partnership Forum (USISPF), and industry leaders. The discussions centred on carbon capture, utilisation, and storage (CCUS) as critical solutions for increasing energy security and lowering emissions.

Puri also emphasised India’s leadership in establishing the Global Biofuels Alliance during its G20 presidency, which works with the United States and other countries to promote low-carbon energy options.

The minister praised the conclusion of major agreements between IGL Social and its US colleagues, which paved the door for additional sustainable energy activities. Discussions with energy behemoths including Vitol, Baker Hughes, and Shell USA focused on investment prospects in innovative technologies such as hydrogen, geothermal energy, and carbon capture.

India is on track to become the world’s third-largest economy by FY31, with a 6.7% growth rate expected this fiscal year, according to S&P Global. The report, “India Forward: Emerging Perspectives,” emphasises the importance of ongoing reforms to improve business efficiency, increase private sector investment, and minimise dependency on state resources. It also forecasted an 8.2% growth rate for FY24, emphasising the need for infrastructure development and geopolitical policies to boost commerce.

India’s equity markets are projected to stay active due to robust growth prospects and improved regulations. Foreign investment in government bonds has increased since India joined key emerging market indices, with additional expansion expected. To maximise trade, especially given that approximately 90% of India’s trade is seaborne, a strong port infrastructure is required to manage rising exports and commodities imports.

The report emphasised that increased domestic energy demand may be met by implementing sustainable technologies such as renewables and low-emission fuels, thereby aligning energy security with the country’s transition ambitions. To achieve food security, agriculture should prioritise productivity and infrastructure improvements through sophisticated technology and legislation, as well as solving significant difficulties in irrigation, storage, and supply networks.

Ghana’s GDP expanded by 6.9% in the second quarter of 2024, its strongest increase since Q2 2019. According to official statistician Kobina Annim, this outperformed analysts’ predictions, owing in significant part to the extractive sector’s rapid rise.

The industrial sector expanded by 9.3%, up from 6.8% in the previous quarter, while agriculture and services rose by 5.4% and 5.8%, respectively.

Despite issues in the cocoa subsector, which contracted by 26.2% for the fourth consecutive quarter, agriculture as a whole performed well, employing approximately 40% of the workforce. Ghana, the world’s second-largest cocoa producer, has faced climate challenges, disease outbreaks, and cocoa bean smuggling.

The services sector continued to contribute the most to growth, accounting for 44.2%, followed by industry (32.2%) and agriculture (23.6%).

Ghana’s economic recovery coincides with a large debt restructuring initiative, which invites overseas bondholders to exchange $13 billion in bonds. The country is in its second year of an IMF program, which includes tough austerity measures.

Annual inflation fell to a 29-month low of 20.4% in August 2024, boosting the prospect of interest rate cuts before the central bank’s September 30 meeting.

On Wednesday, Prime Minister Narendra Modi spoke at the SEMICON 2024 conference near the capital, emphasising the significance of supply chain resilience and advocating for more semiconductor production in India. He emphasised the importance of semiconductors in everything from smartphones to electric vehicles and artificial intelligence, saying, “Resilience of the supply chain is critical.”

The pandemic highlighted global supply chain vulnerabilities, particularly in businesses relying on Chinese imports, such as semiconductor manufacturing. PM Modi cited India’s reforming administration, stable regulations, and rising tech-savvy market as ideal circumstances for investing in chip manufacturing.

“We aim to see Indian-made chips in every device around the world. “We are committed to making India a semiconductor powerhouse,” PM Modi said. He explained the “Three-D Power” that is propelling India’s chip manufacturing: reforms, a strong industrial base, and a tech-hungry market.

The Prime Minister announced that over ₹1.5 lakh crore has already been spent on semiconductor production, with other projects in the works. He also emphasised India’s aspiration to become a global leader in electronics manufacturing, to increase the sector’s current worth of $150 billion to more than $500 billion by the end of the decade, potentially creating 60 lakh employment.