Category: Economy

The World Bank has warned that average potential global economic growth will fall to a three-decade low of 2.2% per year through 2030, bringing in a “lost decade” for the world’s economy, if policymakers fail to adopt ambitious initiatives to boost labour supply, productivity and investment.

In a new report, the World Bank said that failure to reverse the expected slowdown in potential gross domestic product (GDP) growth would have profound implications for the world’s ability to tackle climate change and reduce poverty. Concerted efforts to boost investment in sustainable sectors, cut trade costs, leverage growth in services, and expand labour force participation could boost potential GDP growth by up to 0.7 percentage point to 2.9%, the report added.

World Bank Chief Economist Indermit Gill said that policies which incentivised work, increased productivity, and accelerated investment could reverse the trend.

The overlapping crises in the last few years, such as the pandemic and Russia’s invasion of Ukraine, had ended nearly three decades of sustained economic growth, adding to worries about slowing productivity, which is essential for income growth and higher wages. As a result, average potential growth in GDP dropped to 2.2% from 2022 to 2030, 2.6% in 2011 to 21, and 3.5% rate seen from 2000 to 2010. Low investment will also slow growth in developing economies, with their average GDP growth plunging to 4% for the 2020s, from 5% in 2011 to 2021 and 6% from 2000 to 2010.

New York is the top financial centre in the world, says a list released by think-tank Z/Yen. The list of top 10 financial centres includes London, Singapore, Hong Kong, San Francisco, Los Angeles, Shanghai, Chicago, Boston and Seoul. Mumbai stands 61st in the list, followed by New Delhi at 65th position and Gujarat’s GIFT City at 67th rank.

Published on 23 March 2023, the thirty-third edition of the Global Financial Centres Index (GFCI 33) evaluated future competitiveness and rankings for 120 financial centres around the world. An initiative of China Development Institute (CDI), Shenzhen and Z/Yen Partners, London, the researchers studied 130 financial centres of which 120 financial centres are in the main index. The GFCI is compiled using 153 instrumental factors. These quantitative measures are provided by third parties, including the World Bank, the Economist Intelligence Unit, the OECD and the United Nations.

Ranking at third place in the list, Singapore has maintained its slight lead over Hong Kong in fourth position. Chicago, Boston, and Seoul have entered the top 10, replacing Paris, Shenzhen, and Beijing. Seven Western European centres feature in the top 20 in GFCI 33. Only Guernsey and Reykjavik rose 10 or more places in the rankings.

In the Middle East and Africa region, Dubai and Abu Dhabi continue to take first and second places. Casablanca is the leading financial centre in Africa. Mauritius and Riyadh have gained 10 or more places in the rankings.

Israeli Foreign Minister Eli Cohen and United Arab Emirates Ambassador to Israel Mohamed Al Khaja signed a customs deal on March 26 that paves the way for the countries’ free trade agreement to come into force. The Prime Minister of Israel Benjamin Netanyahu was present on occasion. The agreement will go into force on April 1.

The Israel-UAE Comprehensive Economic Partnership Agreement was signed in Dubai last May, but could not go into force until the two countries signed the customs agreement on Sunday. The customs agreement took time to conclude as the countries had to carefully go through every product and decide what would be covered. The agreement lowers or eliminates tariffs on more than 96% of tariff lines and 99% value of trade between the two countries.

Prime Minister Netanyahu said at the signing ceremony that the agreement will “bring about a reduction in customs, will bring down the cost of living, and will give a shot in the arm to business between Israel and the UAE.”

The free trade agreement covers regulation, customs, services, government procurement, e-commerce, and the protection of intellectual property rights.

According to the deal, about 96% of products traded between the countries, including food, agriculture, cosmetics, medical equipment, and medication, will be excused from customs duty. A number of products will be exempted immediately, while others will gradually be granted an exemption.

The UAE and Israel signed a normalization agreement in 2020 as part of the US-backed Abraham Accords.

Mobile phone exports from India increased to nearly $9.5 billion in February, with Apple contributing half of the total exports, said mobile devices industry body India Cellular and Electronics Association (ICEA) on March 22.

A senior official at the industry body said the industry is on track to cross the target of mobile phone exports worth $10 billion from India by the end of this financial year. Till January 31, the exports were around $8.5 billion, and it is estimated to have reached about $9.5 billion in February, the official added. In 2021-22, the country recorded mobile phone exports worth $5.5 billion, according to the ICEA data.

Apple now dominates the exports with 50 percent share followed by Samsung with around 40 per cent share. The other smartphone companies constitute the remaining 10% export share.

“The mobile phone industry will cross $40 billion manufacturing output and 25 percent exports at $10 billion is a stellar performance,” affirmed Pankaj Mohindroo, Chairman, ICEA.

India has more than 260 units manufacturing mobile phones and accessories today, while it had only two units operational in 2014. The mobile phone production in the country increased from 5.8 crore units valued at about Rs 18,900 crore in 2014-15 to 31 crore units valued at over Rs 2,75,000 crore in the last financial year.

The total installed renewable energy capacity in India touched 168.96 GW by February 2023-end, RK Singh, Union Minister for Power, New and Renewable Energy, informed the Parliament on March 22.

In the written reply to the Rajya Sabha, the union minister said that out of the total 168.96 GW, 64.38 GW is solar power capacity, 51.79 GW hydro, 42.02 GW wind and 10.77 GW bio power. Another 82.62 GW of green energy capacity is under implementation and 40.89 GW of capacity is under various stages of tendering.  A total of 3,16,754.86 MU of electricity has been generated from renewable energy sources during the current year 2022-23 (up to January 2023), Singh told the Upper House.

According to the minister, India’s total power generation capacity was at 412.21 GW as on February 28, 2023. The government’s aim is to achieve 500 GW of installed electricity capacity from non-fossil sources by 2030.

India is ranked third in the Renewable Energy Country Attractive Index in 2021. The country is now the third largest energy-consuming country globally. Furthermore, India ranks fourth in the world for renewable energy installed capacity, wind power capacity, and solar power capacity, according to the REN21 Renewables 2022 Global Status Report.

The International Monetary Fund (IMF) has approved a nearly $3 billion bailout for Sri Lanka, as the country faces its worst financial crisis in more than seven decades. About $333 million will be immediately disbursed to the country under this programme. Sri Lanka defaulted on its debts with international lenders for the first time in history in 2022.

The IMF on March 20 said its executive board approved the bailout, and the country’s presidency said the program will enable it to access up to $7 billion in overall funding. The immediate disbursement of about $333 million will spur financial support from other partners, potentially helping theAsian country emerge from its worst financial crisis in over seven decades.

IMF Managing Director Kristalina Georgieva said Sri Lanka also needs to undertake various reforms.

“For Sri Lanka to overcome the crisis, swift and timely implementation of the EFF-supported program with strong ownership for the reforms is critical,” Georgieva said in a statement.

EFF refers to the IMF’s Extended Fund Facility. The IMF MD emphasised the need for ambitious revenue-based fiscal consolidation. “For the fiscal adjustments to be successful, sustained fiscal institutional reforms on tax administration, public financial and expenditure management, and energy pricing are critical,” Georgieva said in the statement.

In a recent address at an industry event in New Delhi, Singapore’s Minister for Trade and Industry Gan Kim Yong encouraged Indian businesses to increase their investment in Southeast Asia.

Speaking at the annual Confederation of Indian Industry (CII) Partnership Summit, Gan Kim Yong highlighted the importance of Indian businesses viewing Southeast Asia as a lucrative market for trade and investment. He acknowledged that India is headed towards a $30 trillion economy by 2050. “My challenge to Indian businesses is to increase your investment in ASEAN by at least ten-fold to $20 billion by the end of this decade,” he said.

India and Singapore have maintained strong economic ties for years. According to the High Commission of India in Singapore, investors have invested over $137 billion in India over the last two decades. According to the Singapore minister, the two countries can channel their partnership towards renewable energy and supply chain strength, especially as the world faces major challenges on all fronts. “Indeed, we meet in a time of great political, economic, social, and environmental stress. Our world is facing unprecedented uncertainty and economic headwinds. Many countries, even those that once took for granted that the supermarket would always be full, are now worried about food security,” he said. 

Leaders from Singapore and Indonesia signed a memorandum of understanding (MoU) in Singapore on March 16 to develop renewable energy generation projects in Indonesia, both for domestic needs and for export to Singapore.

Singapore and Indonesia will facilitate the development of solar farms and battery energy storage system to supply renewable energy, and when viable, hydrogen and ammonia, said Indonesia’s coordinating ministry for maritime affairs and investments, and Singapore’s trade and industry ministry in a joint statement.

The Green Corridor Project will attract an estimated $50 billion of foreign direct investments to Indonesia, reducing the country’s national determined contributions (NDCs), and transferring renewable energy knowledge and skills into Indonesia. The Green Corridor plan is to develop a green manufacturing industry, creating “tens of thousands” of green jobs for Indonesians, said the Sustainable Energy Association of Singapore (SEAS).

Members of SEAS and multiple partners working to develop the Green Corridor project include AirCarbon Exchange, Climate Resources Exchange, Durapower Batteries, EDPR Sunseap, ET Solar, Haitai Solar, Huawei, Keppel, Meike Solar, Seraphim Solar, Narada Batteries, Gotion Batteries, SERIS, Sungrow, Vanda RE (a joint venture between Gurin Energy and Gentari) and VFlowTech Batteries.

These entities have actively engaged with Singapore’s EMA and Indonesia’s MARVES to develop the Green Corridor project in Batam/Riau Archipelago, Indonesia.

India and the European Union (EU) concluded their fourth round of talks for a comprehensive free trade agreement (FTA) in Brussels on March 18, tweeted Nidhi Mani Tripathi, Joint Secretary, Department of Commerce and India’s chief negotiator for the agreement. The next round of talks is planned for June 12-16.

India had started negotiations for a trade pact with the 27-nation bloc of EU in 2007, but the talks stalled in 2013 as both sides failed to reach an agreement on key issues, including customs duties on automobiles and spirits and the movement of professionals. The two sides resumed negotiations on June 17, 2022 after a gap of over eight years on the proposed agreements on trade, investments and Geographical Indications (GIs).

India’s merchandise exports to EU member countries stood at about USD 65 billion in 2021-22, while imports aggregated USD 51.4 billion.

A GI is primarily an agricultural, natural or manufactured product (handicrafts and industrial goods) originating from a definite geographical territory. Typically, such a name conveys an assurance of quality and distinctiveness, which is essentially attributable to the place of its origin.

Big Japanese companies have offered the largest pay rises in a quarter century in response to Japanese Prime Minister Fumio Kishida’s calls for higher wages to counter rising living costs.

Worker pay has been low in Japan since the late 1990s due to sputtering growth, when investment in the economy turns sluggish over a sustained period of time, affecting consumption. It has left Japanese pay well behind the pays in other member countries of the Organisation for Economic Co-operation and Development. Now, a weak yen and rising commodity prices have driven up import costs and pushed inflation to the highest in four decades, prompting Kishida to ask for better pay.

The average wage rise at “shunto” spring wage talks in 2023 was the highest in about 30 years, of almost 3 per cent, which would be the highest since the 2.9 per cent in 1997.

“This spring marks a turning point for growth and wealth distribution,” Mr Kishida told a meeting with representatives of business lobbies and unions. He also said he aimed for a nationwide increase in the minimum wage.

A number of Japan’s biggest corporations, including Toyota Motor and Hitachi, said that they had agreed fully to the requested increases from unions.