Category: Economy

UK Prime Minister Rishi Sunak has said that his government remains committed to working “as quickly as possible” for the successful conclusion of the free trade agreement (FTA) with India, as most of the substantive negotiation conversations were completed at the end of last month.

At a House of Commons session on the G20 Summit in Indonesia on Thursday, the leader updated Parliament that he reviewed progress on the FTA during his first meeting with the Prime Minister of India, Narendra Modi, since taking charge as the UK Prime Minister.

He was questioned by Opposition Labour Party Leader Keir Starmer and his own Conservative Party MPs on the timeline for the completion of the agreement with India.

The British Indian leader said that the UK’s relationship and partnership with India are much broader than just a trading relationship.

“We also announced the mobility scheme to enable young people from India to come here and young Brits to go there, which is a sign of what is possible. Such exchanges are positive both for our countries and for the young people who benefit,” he said, referring to the new UK-India Young Professionals Scheme launched at the summit, involving 3,000 new reciprocal visa offers annually for under-30s.

India’s economy is positioned positively compared to other Asian emerging markets such as Korea and Taiwan and set to surpass Japan and Germany to become the world’s third-largest economy by 2027, said Jonathan Garner, Chief Asia and Emerging Market Equity Strategist, Morgan Stanley, in an interview. The expert added that India will have the third-largest stock market by the end of this decade.

The expert called India to be one of the most expensive markets and has enjoyed earnings growth in the current financial year, while Korean and Taiwanese economies have suffered blows due to semiconductor shortages. According to Garner, India’s market outlook is positive for 2023 on lower inflation and lesser rate hikes.

In a new Morgan Stanley Research Bluepaper, analysts working across sectors expect a boost in India’s share of global manufacturing, growing credit availability, new businesses, improved quality of life, and a boom in consumer spending. “Consequently, India is gaining power in the world order, and in our opinion, these idiosyncratic changes imply a once-in-a-generation shift and an opportunity for investors and companies,” added Ridham Desai, Morgan Stanley’s Chief Equity Strategist for India.

The paper also underlined multinationals’ sentiment on the investment outlook in India to be at an all-time high. The positive sentiment could lead to increased share of manufacturing in the Indian GDP from 15.6 percent to 21 percent by 2031 and lead to doubling India’s export market share.

India and the Association of Southeast Asian Nations (ASEAN) on Saturday advanced their relations to a Comprehensive Strategic Partnership, vowing to augment cooperation in diverse areas, including maritime, cyber security, and interoperability of digital financial systems.

Vice President of India Jagdeep Dhankhar led the Indian delegation to the Asean-India Summit held in Phnom Penh, Cambodia. The delegation included Union External Affairs Minister S Jaishankar.

Under maritime cooperation, India and Asean will work on maritime security, countering piracy, search and rescue operations, and humanitarian assistance and disaster management. The sides will explore activities to execute the Asean Outlook on the Indo-Pacific and India’s Indo-Pacific Oceans Initiative, said a joint statement issued after the summit.

The other key areas under the partnership are sustainable development with the focus on new and emerging technologies for renewable energy, smart agriculture, healthcare and space, revival of tourism, activities involving youth, and regional and international issues of common concern.

The two sides committed to work for the early completion of the India-Myanmar-Thailand trilateral highway and its eastward extension to Laos, Cambodia and Vietnam, and explore synergies between the Master Plan on ASEAN Connectivity 2025 and India’s connectivity initiatives under its Act East policy.

German Chancellor Olaf Scholz discussed energy and trade ties with Vietnam’s Prime Minister Pham Minh Chinh during a visit to Hanoi on Sunday.

On the first visit of a German leader to Vietnam in more than a decade, Scholz stopped in Vietnam before visiting the G20 leaders’ summit in Indonesia. The visit underlined Vietnam’s rising role in global supply chains and interest of German firms to take their manufacturing operations beyond China in Asia.

Speaking at the joint news conference with Pham Minh Chinh, Scholz called for deeper trade relations with Vietnam and committed to help the Asian country in building a greener economy, such as in the expansion of Hanoi’s metro system.

Olaf Scholz also visited China a week before the G20 summit and Singapore before heading to the summit. Singapore is the second country after Vietnam in Southeast Asia that has a free trade agreement with the European Union. The two countries are the EU’s biggest trading partners in the region.

Germany is Vietnam’s second-largest trading partner among EU states after the Netherlands, with exchanges worth $7.8 billion last year. About 500 German firms operate in Vietnam, of which around 80 have manufacturing plants in the country. Engineering giant Bosch, energy firm Messer, and many smaller companies part of the global automotive supply chain are located here. Many German companies located in China are keen to move some of their operations to other countries in Asia.

India’s annual wholesale price index (WPI) inflation reduced to 8.39% year-on-year in October 2022, to come in single digits and the lowest since March 2021, thanks to the reduction in commodity prices.

The WPI came in double digits for 18 consecutive months from April 2021 till September 2022. The inflation last month was lower than the 10.70% recorded in the previous month of September. This is the first time in 19 months that WPI inflation has come in single digit, last recorded at 7.89% in March 2021.

In its statement issued on Monday, the Ministry of Commerce and Industry credited the decline in inflation to the fall in the price of mineral oils, basic metals, fabricated metal products, except machinery and equipment; textiles; other non-metallic mineral products; minerals, and other commodities.

The ministry shared that the inflation in food articles in October stood at 8.33%, lower that 11.03% witnessed in September 2022. Inflation in vegetables was at 17.61% during the month, against 39.66% in September. In the category of Fuel and Power, inflation was 23.17%. In the case of manufactured products, it was recorded to be 4.42% during October.

Kenya has inked a deal with Australian firm Fortescue Future Industries (FFI) to establish a green hydrogen and ammonia plant that will begin its plan to utilise green energy across the African continent. The deal was signed on the sidelines of the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change in Egypt.

Kenya President William Ruto signed the deal with the FFI Executive Chairman Andrew Forrest. The company will set up an initial 300 MW green hydrogen and ammonia plant in the next three years, which will also produce fertiliser. The project will be expanded in the future, with a target of adding 25 MW.

The industrial-scale production of green hydrogen and ammonia will yield clean, inexpensive fuel and fertiliser for Africa. It will help Kenya, already a leader in the geothermal revolution across Africa, increase its footprint in the renewable energy market. The country has a geothermal capacity of 863 MW, which is highest in Africa and seventh globally, according to the International Renewable Energy Agency’s Renewable Capacity Statistics 2022 report.

The hydrogen deal will also lead to job creation, boost food security through fertiliser production, and help Africa reduce its dependence on fossil fuels.

The latest move has an estimated yearly output of 1.7 million tonnes for export, which will help Kenya join other African countries such as Nigeria and South Africa to build Africa’s hydrogen and ammonia capacity.

Malaysia’s economy posted double-digit growth in the third quarter of the year, boosted by rising domestic demand and strong exports, its central bank said on Friday. The rise is the first time in over a year.

The country’s gross domestic product (GDP) rose 14.2% in July-September from a year earlier, at a faster pace than the 8.9% annual rise in the previous quarter. The increase is also the fastest pace of growth since the second quarter of 2021, when the economy registered a growth of 16.1%.

Bank Negara Malaysia (BNM) credited the growth to continuous expansion in domestic demand, a strong recovery in the labour market, significant exports, and ongoing policy support. “Because of the healthy growth outturn, growth this year will exceed the 7% projected earlier,” BNM Governor Nor Shamsiah Yunus told reporters.

Malaysia’s economy has recovered strongly from a pandemic-induced decline, but faces the risks of a global slowdown. The government last month revised its growth projection for 2022 to 6.5%-7.0% from 5.3%-6.3%, but now expects it to be 4%-5% next year. The government has managed to contain inflation with subsidies and price control measures this year, but upside risks continue, with the central bank announcing its fourth consecutive 25-basis-point rate hike last week.

Unified Payments Interface (UPI)-based money transfers between India and Singapore will become possible soon, as the countries are all set to link their respective fast payment systems, Unified Payments Interface (UPI) and PayNow, said India’s High Commissioner in Singapore P Kumaran.

The technical work to connect UPI and PayNow has been finished.

The central banks of India and Singapore, the Reserve Bank of India (RBI) and the Monetary Authority of Singapore (MAS) respectively, will collaborate on the move. The service will enable easy fund transfers between the countries at the lowest possible cost.

UPI-PayNow will benefit workers who come to Singapore for a brief period of time and on average give up about 10% of the amount as bank fees for money transfers. The move will also help Indian tourists, who will have the advantage of using the service over international credit cards that have exorbitant fees.

PayNow is similar to RuPay, the Indian card payment network. It has linkages with other Asean countries, so India can be connected to those through Singapore if the UPI-PayNow link is maintained. A link like UPI-PayNow could serve as a model for establishing an infrastructure for cross-border payments between India and the countries of the regional bloc.

The International Monetary Fund (IMF) conditionally agreed to a $4.5-billion support programme for Bangladesh on Wednesday. The aid will help the South Asian country evade economic instability escalating into a crisis, said its Finance Minister A.H.M. Mustafa Kamal.

The IMF said that a “staff-level agreement” had been reached with Bangladesh for a 42-month arrangement, which includes about $3.2 billion from its Extended Credit Facility (ECF) and Extended Fund Facility (EFF), and about $1.3 billion from its new Resilience and Sustainability Facility (RSF). The objectives of the support program are to preserve macroeconomic stability and back strong, inclusive and green growth, while protecting the vulnerable, said the IMF in a statement. The agreement now needs approval by IMF management and consideration by its Executive Board, which is likely in the coming weeks.

Bangladesh’s economy, at $416-billion, has been one of the world’s fastest growing for years. However, rising energy and food prices, led by Russia’s invasion of Ukraine, and shrinking foreign exchange reserves, made its import bill and current account deficit rise.

The country is the third South Asian nation after Pakistan and Sri Lanka to get a “staff-level agreement” with the IMF for loans this year.

The EU-India InnoCenter, a programme financed by the European Union’s research and innovation framework programme Horizon 2020, is bringing high-impact and unique tech startups (Series-A funded) to explore, enter and scale in the Indian market.

The ventures are coming for the first in-country flagship event, Blue Carpet Night, to be hosted by EU-India InnoCenter in Bengaluru. The Ambassador of the European Union to India Ugo Astuto will virtually launch the meet. The event will showcase European Innovation on November 15.

The visiting technology start-ups are focused on sustainability-tech, deep-tech, logistics, and mobility. Their visit is expected to augment the emerging tech talent pool and help in diversifying the technology outlook in the country.

In the last six months, more than 100 European start-ups have been screened by the EU-India InnoCenter. At the end of the process, 10 ventures from the present group are coming to build a strategic network in the Indian Innovation Ecosystem. These startups already have operations in Europe and have an understanding of the Indian market. The combination of European R&D with the Indian government’s investment will help not only the Indian market, but also extend innovation and collaboration among the Indian Industrial ecosystem and European startups, said the statement issued by the EU-India InnoCenter.