Category: Economy

The US and India aim to enhance information sharing on opioids like fentanyl to address its misuse in the US. Kristie Canegallo, acting deputy secretary at the US Department of Homeland Security, discussed this during the Senior Officials’ Homeland Security Dialogue in New Delhi. The dialogue is part of the 2010 India-US counter-terrorism initiative.

Canegallo emphasised augmenting information sharing, especially regarding fentanyl, amid existing counter-narcotics efforts. Synthetic opioids, mainly fentanyl, caused about
two-thirds of the 2021 drug overdose deaths in the US.

India legally produces and exports opioids, including fentanyl, to the US. While Mexico and China are primary sources, India’s role in trafficking such drugs has drawn the attention of the US Drug Enforcement Agency.

The disruption of precursor chemical fluxes was also discussed. In January, the US and China launched a joint anti-narcotics effort against fentanyl production and trade.

Addressing terrorism, discussions included the threat of radicalised individuals from ongoing conflicts and organised terror groups. Canagello highlighted the evolving threat landscape, acknowledging the increased risk of lone-wolf attacks on the US. Overall, the dialogue underscores bilateral efforts to tackle drug trafficking and terrorism, recognising the evolving nature of these challenges.

India’s manufacturing sector surged in February, marking its most robust growth in five months amidst subdued cost pressures. The HSBC final India Manufacturing Purchasing Manager’s Index (PMI), compiled by S&P Global, exceeded expectations by rising to 56.8 from January’s 56.5, surpassing the preliminary estimate of 56.7.

For 32 consecutive months, manufacturing PMI in India has been above 50 points, indicating steady growth. The nation’s economy, which is the fastest-growing major economy in the world and the third-largest in Asia, grew by 8.4% during the October–December quarter.

Ines Lam, an economist at HSBC, emphasised that both domestic and foreign demand were responsible for the increased output. Demand from several nations, including Australia, China, US, and UAE, boosted demand globally, with expansion reaching a nearly two-year high.

Even with a cautious perspective for the future, companies declined to add new workers, arguing that their current workforce levels were sufficient. Companies began stockpiling raw materials in anticipation of future demand as a result of cost pressures that had increased slowly since mid-2020.

As long as GDP is strong and inflation stays within the target range of 2–6%, the Reserve Bank of India is expected to keep interest rates where they are until at least July, even if inflationary pressures have eased.

On Friday, Japanese and Australian stocks surged to new highs, propelled by reassuring US inflation figures that eased fears of an imminent rate cut. European markets were poised for gains, with futures indicating upward trends.

The Nikkei index soared 1.9%, hitting a fresh peak, while Australia’s resource-heavy shares climbed 0.6% to a record high. Despite a 0.2% increase in MSCI’s Asia-Pacific shares outside Japan, weekly losses persisted at 0.4%. Blue-chip stocks and the Shanghai Composite Index rose on mainland Chinese markets. Hong Kong’s Hang Seng index also rebounded, rising by 0.6%.

The U.S. PCE price index rose by 0.3% in January, which helped the S&P 500 and Nasdaq close at record levels on Wall Street. This kept hopes of a potential June interest rate cut alive, with markets pricing at 82 basis points easing for the year.

European inflation figures from Germany, France, and Spain met expectations, leading to a decline in the euro against the dollar. The yen also weakened against the dollar following contrasting statements from Bank of Japan officials regarding inflation targets.

Brent reached $82.21 per barrel and US crude at $78.47 per barrel. Meanwhile, spot gold prices edged 0.1% higher to $2,044.99.

Venezuela’s government is ramping up efforts to curb inflation before this year’s presidential election. Despite facing economic crises marked by shortages and hyperinflation, the government aims to stabilise the bolivar-dollar exchange rate and manage spending without fueling consumer prices.

In 2023, consumer prices soared by nearly 190%, with basic goods becoming increasingly expensive as the local currency depreciated sharply against the dollar. However, monthly price increases have since been reduced to 107% year-on-year through January, with the government employing orthodox anti-inflation measures, including injecting dollars and tightly controlling credit and spending.

President Nicolas Maduro aims to achieve annual inflation in double digits, a significant shift from past years when inflation consistently exceeded 100%. The government’s policy emphasises low inflation and exchange rate stability.

Delcy Rodriguez, the vice president and finance minister, closely monitors weekly price reports from the central bank. In 2023, the government managed to sell $4.2 billion through local banks, an increase of 17% over last year.

With the relaxation of U.S. oil sanctions late last year, Maduro’s administration expected a 27% increase in income from the state oil company PDVSA. However, recent tensions with the U.S. and the opposition pose challenges to sustained economic recovery.

Singapore’s Defence Minister, Ng Eng Hen, emphasises the increasing global risks, prompting the nation to uphold defence spending at 3% of GDP to fortify the Singapore Armed Forces (SAF) against potential aggression. Despite potential conflicts, Singapore commits to maintaining military spending over the next decade, aiming to boost the SAF’s capabilities.

Ng Eng Hen highlighted ongoing global tensions, citing the Russia-Ukraine conflict and the Israel-Hamas conflict spreading. There has been an escalation of tensions between the US and China, particularly over Taiwan, showing a shift from considering conflicts improbable to accepting their existence.

Ng Eng Hen added Singapore’s self-reliance in defence, cautioning against reliance on external assistance in times of crisis. Despite a nominal increase in defence expenditure, Singapore’s defence spending as a percentage of GDP has declined due to rapid economic growth. However, sustained investments have ensured the nation’s defence capabilities remain robust.

He further emphasised the value of regular defence spending, citing the building of Invincible-class submarines and the purchase of F-35 fighters as examples. He emphasised the critical role of infrastructure and training in enhancing the effectiveness of national servicemen and regulars, both domestically and abroad.

Egypt has signed seven Memoranda of Understanding (MoUs) with global developers for green hydrogen and renewable energy ventures in the Suez Canal Economic Zone (SCZONE). It promises investments surpassing $40 billion over the next decade.

The Egyptian government signed agreements with international developers, anticipating investments of about $12 billion for a preliminary pilot programme and an additional $29 billion for the first phase. Ayman Suleiman, CEO of the Sovereign Fund of Egypt, emphasised the growing interest from investors in green hydrogen projects, highlighting the programme’s significance in steering Egypt towards sustainable initiatives.

Along with representatives from the Suez Canal Economic Zone Authority and the New and Renewable Energy Authority, PM Mostafa Madbouly witnessed the signing. Hala El-Said outlined Egypt’s ambition to position itself as a regional green energy hub, citing successful projects such as Africa’s premier green ammonia plant.

A National Green Hydrogen Strategy released in November aims to reduce carbon emissions by 40 million metric tonnes by 2040 and contribute 5-8% to the global hydrogen market. Additionally, Egypt sealed a $15.6 billion deal with Chinese firms in November 2023 to boost renewable fuel manufacturing in the Suez Canal Economic Zone, promising approximately 9,000 job opportunities and establishing 11 projects.

On Wednesday, Namibia’s finance minister announced its economic growth forecasts for 2023 and 2024. He further announced a reduced budget deficit, primarily driven by robust performance in the oil and mining sectors.

Forecasts predict a 5.6% growth rate for the previous year and 4.0% for the current year, up from earlier estimates of 3.5% and 2.9%, respectively. Growth is expected to moderate to 3.9% in 2025, as per Ipumbu Shiimi’s budget speech.

The budget deficit for 2023–24 is estimated at 3.2% of GDP, down from 4.2%, and is forecast to remain at 3.2% of GDP in 2024–25. Shiimi emphasised that increased uranium production as a result of rising prices and ongoing petroleum exploration were the main factors driving the strong growth.

Although Namibia does not produce oil, significant interest from energy companies has been attracted following discoveries by TotalEnergies and Shell.

With a $750 million Eurobond maturing in October 2025, the government plans to retire $500 million at maturity and refinance the remaining $250 million in the upcoming fiscal year.

Shiimi also proposed corporate tax reforms to enhance competitiveness and a tax reduction for low-income households to alleviate financial burdens.

Indonesia and South Africa, leading coal exporters, target expanding thermal coal sales to India to regain lost market share. The competition intensified with the United States, Russia, and Australia seizing ground due to geopolitical shifts in trade routes.

South Africa, leveraging its low sulphur, high calorific value coal, eyes India’s growing steel industry. Kgabi Masia from Exxaro Resources anticipates supplying 60 million metric tonnes by March 2025. However, South Africa’s share in India’s thermal coal imports dropped to 16% in 2023 from 22% pre-pandemic, while Indonesia’s declined to 58% from 65%.

Ardian Rosadi Budiman, from Adaro Energy, projects Indonesia supplying up to 110 million metric tonnes to India in 2023, a 7% increase from 2022. Indonesia, the world’s largest thermal coal exporter, aims for a record output of 710 million metric tonnes this year. Despite domestic demand, Budiman is confident in India’s steady appetite for Indonesian coal.

Following Russia’s conflict with Ukraine, South Africa diverted coal supplies to Europe, reducing India’s share. Due to increased exports to China, Indonesia lost ground to Australia.

It emphasises the fluidity of global energy markets and the strategic importance of securing key trade partnerships. For Indonesia and South Africa, the Indian market remains crucial, prompting them to optimise strategies for sustained growth amid evolving market dynamics.

Brazil’s Finance Minister Fernando Haddad warned about global economic challenges as G20 finance leaders convened in Sao Paulo, grappling with divisions over Ukraine and Gaza conflicts. Haddad emphasized the need for G20 action on climate change and poverty amidst a “challenging” global economic environment.

Regarding the economic part of the communiqué, Tatiana Rosito, the coordinator for Brazil’s G20 financial track, reported successful discussions. Meanwhile, for Germany to agree to the statement, German Finance Minister Christian Lindner insisted on discussing geopolitical matters such as the conflict in Ukraine.

Lindner suggested funding Ukraine with money from Russian assets that were placed under lockdown, highlighting possible obstacles to a final agreement. Brazil’s aim to avoid contentious geopolitical matters is reflected in the draft communique’s sparse discussion of regional problems.

The G7 also convened to deliberate tactics against Russia, with U.S. Treasury Secretary Janet Yellen pleading with allies—supported by Canada—to release frozen Russian assets to support Ukraine.

The G20 gathering occurs amid global economic uncertainties, rising debt burdens, and inflation concerns. The Brazilian government advocates for greater representation for developing nations in the G20 and international financial institutions dominated by advanced economies.

Abu Dhabi’s Mubadala Investment Co. plans significant investments in artificial intelligence and space technology this year, prioritizing the United States.

Managing director Khaldoon Mubarak emphasized the shift from mere asset investment to fostering global progress at an investor conference in Abu Dhabi. They intend to deepen strategic investments in the UK, Europe, and France while expanding into healthcare, digital infrastructure, and financing, with an increased focus on Asia.

Mubadala, controlling $276 billion of assets, aims to drive progress by investing in solutions for global challenges, including dynamic markets in Asia. Despite not disclosing specific investment amounts, Mubarak emphasized increased long-term allocations for Asia, including Japan, China, Korea, and India.

Mubadala’s heightened focus on Asia implies confidence in the region’s economic resilience and investment potential. Mubarak clarified that investments are driven by opportunity rather than geopolitics, despite close UAE-China ties. However, concerns persist in Washington about Gulf-Chinese partnerships and the potential exposure of sensitive U.S. technology.

In partnership with Goldman Sachs, Mubadala announced a $1 billion private credit initiative focusing on the Asia Pacific, amidst efforts by the U.S. and its allies to counterbalance China’s regional influence. Mubadala’s strategic investments signal confidence in the future of global markets, particularly in Asia.