Category: Economy

Goldman Sachs Chief Executive Officer David Solomon has said that India now has a very high growth trajectory, with a predicted growth of 6-7 percent over the next three years.

In an interview on June 28, Solomon said that global CEOs are thinking about India as a big growth opportunity while recognising some of the challenges with investing in the country. Over the period of a year, the global economy, and the United States in particular, have been ‘more resilient’ than he would have expected, adding that there could be a period with 0-1 percent growth and 4 percent inflation.

The Goldman Sachs CEO added that there are significant macro signs to indicate slowing growth in the world, and it was hard to see a scenario where US inflation goes back to 2 percent anytime. Soloman pointed at important macro trends that are inflationary, including geopolitics, energy transition and supply chain adjustments.

On the US regional banking crisis that came after Silicon Valley Bank’s collapse in March this year, Solomon said the crisis was short term, with a handful of banks with very specific business models affected.

India’s Unified Payments Interface (UPI) infrastructure could be an inspiration for a global not-for-profit payment system for refugees, said United Nations International Computing Centre’s (UNICC) director in an exclusive interview to an Indian financial and business portal.

The UNICC Director Sameer Chauhan said that during the war in Ukraine, UNHCR (United Nations High Commissioner for Refugees) issued monthly payments to refugees using debit cards, but faced challenges such as lost cards and limited access to funds. So, in late 2022, it successfully piloted a crypto-based solution where refugees with mobile phones received crypto payments tied to US stablecoin, but India’s UPI infrastructure could be the inspiration for a global not-for-profit payment system for refugees. He added that issuing monthly payments to refugees using debit cards, like the UN initially did during the war in Ukraine, is challenging due to issues like lost cards and limited access to funds.

In February, the Reserve Bank of India (RBI) extended UPI services for inbound travellers from G20 countries. In the same month, India and Singapore also signed a pact to launch cross-border connectivity between UPI and its Singapore counterpart, PayNow. India has also signed memoranda of understanding with 13 countries that want to adopt UPI for digital payments.

Denmark, Ireland, and Switzerland claimed the top three positions in the latest World Competitiveness Ranking. The Netherlands, Taiwan, Hong Kong, Sweden, the USA, and the UAE make the rest of the top 10 in the ranking published by the International Institute for Management Development (IMD).

India slipped three spots to secure the 40th position in the latest world competitiveness ranking published by the International Institute for Management Development (IMD). The annual report by IMD’s World Competitiveness Centre (WCC) revealed that India, despite the drop, still held a better position compared to the years 2019-2021 when it was consistently ranked 43rd.

The IMD report highlighted that India witnessed improvements in government efficiency but slightly underperformed in business efficiency, infrastructure, and economic performance when compared to other countries. Exchange rate stability, compensation levels, and advancements in pollution control were the top three contributing factors that positively impacted India’s score.

The rankings also reflected the competitiveness improvements of economies that reopened later after the COVID-19 pandemic. Thailand, Indonesia, and Malaysia witnessed upward movement in the ranking, while early-opening economies like Sweden and Finland experienced a setback. The report also serves as an indicator of the quality of life in each country assessed.

Despite the drop in rankings, India’s positioning in the World Competitiveness Ranking is considered valuable for evaluating contrasting business environments, aiding international investment decisions, and assessing the impact of public policies.

Britain’s public sector net debt surpassed 100 percent of gross domestic product (GDP) in May as borrowing was higher than expected, the Office for National Statistics (ONS) said on June 21.

The country’s public sector net debt, excluding that of state-controlled banks, touched 2.567 trillion pounds, an amount equivalent to 100.1 percent of its GDP. This is the first time that debt stood above 100 percent of GDP since 1961 although it was temporarily recorded as surpassing that threshold during the COVID-19 pandemic before being revised lower later.

The ONS said government borrowing in May stood at 20.045 billion pounds. A Reuters poll of economists had pointed to public sector net borrowing, excluding state-owned banks, of 19.5 billion pounds.

This marked a 3 billion pounds’ decline from April, but was still more than double that of May last year and represented the second-highest May borrowing figure since the government started keeping records.

UK’s annual inflation remained unchanged in May from April this year, the ONS added. Economists expect that this will likely drive up spending through increased debt interest payments and inflation-linked benefits and tax credits.

India and the United Arab Emirates (UAE) have agreed to increase non-petroleum trade from $48 billion to $100 billion by 2030, union commerce and industry minister Piyush Goyal said on June 19.

Speaking to media after the first joint committee meeting of the India-UAE Comprehensive Economic Partnership Agreement (CEPA), the union minister said that the nations have mutually agreed to become more ambitious and move on from their earlier target of an overall $100 billion bilateral trade by 2030 to non-petroleum bilateral trade of $100 billion by 2030, doubling their non-petroleum trade from $48 billion today to $100 billion in the next seven years.

The joint committee, comprising officials from both the countries, aims to review the terms of the trade agreement, which came into force on May 1, 2022.

UAE’s Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi said initial figures suggest that in the first 12 months of the India-UAE CEPA, bilateral non-oil trade rose 5.8 percent from last year. In FY23, UAE was India’s third largest crude oil import partner, with a share of over 10 percent.

Thani bin Ahmed Al Zeyoudi pointed out that these figures came amid a sharp decline in global trade in Q3 and Q4 of 2022, proving that the nations have created a real nexus of growth. “Even more impressive are the figures from Q1, 2023. In the first three months of the year, total bilateral trade reached $13.2 billion, up 16.3 percent over the previous quarter,” he added.

Bangladesh’s central bank will allow the country’s currency, taka, to float freely, in response to the demands from the International Monetary Fund (IMF) to unlock more money from the $4.7 billion loan program.

Bangladesh Bank will adopt a unified exchange rate regime between the taka and the dollar or any other foreign currency and from July 1, it will no longer sell any foreign exchange at a discounted rate. By the third quarter of 2023, all international transactions will be based on the new exchange rate structure, closing the gap between formal and informal markets.

While Bangladesh is not heavily indebted, it joins several such countries in loosening a tight grip on local currencies to get financing from IMF. Pakistan, Egypt and Lebanon are among other countries that have dropped their fixed exchange rates this year. A freely floating currency regime could help replenish Bangladesh’s reserves by increasing the attractiveness of its exports.

The new market-driven exchange rate regime will provide “greater transparency and efficiency in foreign exchange transactions, benefiting businesses, individuals and the economy,” the Bangladesh central bank said in a statement. The bank also does not see any major depreciation of the taka, which has declined about 5 percent this year, it added.

The Bangladesh government received $476 million as the first installment of the IMF loans in February. The disbursement of the second tranche is expected in November.

Under the One Sun, One World, One Grid project, India and the United Arab Emirates (UAE) conducted negotiations in June to connect their systems via undersea cables so that both nations could trade in renewable energy.

According to a news report in an Indian business daily, the nations are aiming to sign a memorandum of understanding for electricity connectivity and trade. The Union Cabinet in India has received a proposal for subsea cable grid connectivity. The UAE will conduct a feasibility study, adds the report.

India can consider using Oman as a port of call and then using the connectivity to the UAE. As the Gulf nation intends to increase its grid connectivity with North Africa and Europe, giving it the chance to sell renewable energy further, this would be strategically significant for India.

By 2030, India wants to have 500 GW of renewable energy capacity, with solar energy playing an important part. The nation presently has 67.8 GW of installed solar power capacity. In addition to cooperation and knowledge sharing, the nations plan to invest in sustainable energy and reform the electricity market and distribution. Effective cooling systems are one of the common interest themes of the forthcoming climate conference, COP28, to be hosted in the UAE from November 30 to December 12, 2023.

French aerospace giant Airbus has landed the biggest-ever aircraft order in the history of commercial aviation with budget Indian airline IndiGo for 500 of its A320 planes. The planes are to be delivered between 2030 and 2035. The new deal brings the total number of Airbus planes IndiGo has ordered to 1,330.

In February, Air India ordered more than 470 jets from Airbus and Boeing (BA). The agreement was the largest ever plane deal by number of aircraft. However, it was surpassed on June 19 by IndiGo’s order for 500 Airbus narrowbody jets.

UK Prime Minister Rishi Sunak on June 20 said that Airbus’s multi-billion-dollar deal with IndiGo to supply 500 aircraft is a major boost for the UK aerospace sector, which will benefit from billions of pounds in investment and thousands of new jobs.

Pieter Elbers, CEO, IndiGo, in a statement said that the June 19 order would help the company “fulfill its mission to continue to boost economic growth, social cohesion and mobility in India.” Three quarters of IndiGo’s flights travel to domestic destinations. In India, Elbers added, “an expanding economy and rising disposable incomes continue to add millions of first-time flyers to a booming aviation market.”

On the occasion of World Refugee Day, more than 40 corporations, including Louis Vuitton, Adidas, Starbucks, L’Oreal, PepsiCo, and Hyatt have pledged to hire, connect to work, or train a total of 2,50,000 refugees in Europe, with 13,680 of them getting jobs directly in those companies.

World Refugee Day is celebrated on June 20 every year. The day is designated by the United Nations to honour refugees from around the world.

Companies such as Amazon Inc, Marriott International, and Hilton Worldwide Holdings Inc have pledged to hire refugees, especially women who fled war-torn Ukraine, in a hope to fill staffing needs after the economy bounced back from the COVID-19 pandemic. A severe economic crisis, the pandemic also led to challenges like violence, war, poverty, and refugee crisis.

Amazon will hire at least 5,000 refugees over the next three years in Europe, followed by Marriott and Hilton with 1,500 each, Starbucks and ISS with 1,000 each. Brands like Adidas, Starbucks, L’Oreal, PepsiCo, and Hyatt have smaller commitments. Amazon has said that the vast majority of jobs will be hourly roles at fulfilment and storage centres and in transport and delivery. Jobs offered by Marriott will be hourly positions such as housekeepers, kitchen staff and front desk attendants.

According to the United Nations, 110 million people have been displaced worldwide, with about 12 million from Ukraine, nearly half of whom are living in Europe after the continent’s largest movement of refugees since World War II.

Global leaders gathered in Paris on June 22-23, 2023 to seek financial solutions to tackling poverty, curbing planet-heating emissions and protecting nature. Opening the summit, French President Emmanuel Macron called for a “public finance shock” – a global push of innovation and financing – to fight these challenges.

Ugandan climate campaigner Vanessa Nakate took the podium at the New Global Financial Pact Summit at the Palais Brongniart to criticise the fossil fuel industry, saying they promise development for poor communities but the energy and profit go elsewhere. “Please do not tell us that we have to accept toxic air and barren fields and poisoned water so that we can have development,” she said.

In her address, Barbados Prime Minister Mia Mottley – an advocate for reimagining the role of the World Bank and International Monetary Fund in an era of climate crisis – insisted on an absolute transformation of our institutions.

Other summit participants included Saudi Arabia Prime Minister Crown Prince Mohammed bin Salman, United Nations Secretary-General Antonio Guterres, US Treasury Secretary Janet Yellen, IMF Managing Director Kristalina Georgieva, and World Bank President Ajay Banga.

Outlining the challenges facing developing countries, Guterres said more than 50 nations were now in or near debt default – many of which are also particularly vulnerable to climate impacts – while many African countries are now spending more on debt repayments than on healthcare.