Category: Economy

Bengaluru will host the first Finance and Central Bank Deputies (FCBD) gathering under India’s G20 Presidency beginning Tuesday. The Ministry of Finance and the Reserve Bank of India will jointly host the three-day gathering, from December 13-15, 2022, which will kick off discussions on the “Finance Track” agenda.

The G20 Finance Track is led by the central bank governors and finance ministers of G20 nations. The track focuses on economic and financial issues, and offers a useful forum for discussion of international economic issues and the coordination of policy. Finance Minister Nirmala Sitharaman and Governor RBI Shaktikanta Das will lead the Finance Track. The G20 Finance Ministers and Central Bank Governors Meeting will take place from February 23 to 25, 2023, in Bengaluru.

Ajay Seth, Secretary of Economic Affairs, and Dr. Michael D. Patra, Deputy Governor of the RBI, will co-chair the upcoming meeting of the G20 FCBD. Their counterparts from other G20 member nations will join them, along with other nations and international organisations invited.

According to an official press release, the G20 Finance Track covers the global economic outlook, the international financial architecture, infrastructure development and financing, sustainable finance, global health, international taxation, and issues relating to the financial sector, including financial inclusion.

Thailand Prime Minister Prayut Chan-o-cha on Saturday welcomed this year’s 10 millionth visitor to the country at Suvarnabhumi Airport to celebrate the revival of the tourism industry.

Two tourists who arrived on a flight from Saudi Arabia received special prizes from the Prime Minister. The prizes included Limousine transfer, air tickets, shopping vouchers and virtual land, among others. The passengers were welcomed by traditional drummers and dancers.

Around 40 million tourists were welcomed by the Asian country in 2019, but COVID-19 restrictions gave a major setback to the travel industry. Now, with relaxation in the restrictions worldwide, the travel numbers in Thailand have started a slow recovery and the government is aiming to generate tourism revenue of $16 billion this year.

The Thai government figures suggest the country would welcome roughly 23 million tourists in 2023, while some analysts believe a full recovery in tourist numbers could happen in 2024. Thai hotel owners and restaurant owners have breathed a sigh of relief as businesses have slowly picked up.

Analysts have also cautioned against over-optimism, with threats of economic stagnation, pandemic threats, slowdown and inflation persisting. The recovery also depends on China relaxing international travel rules, as the country sends maximum foreign tourists to Thailand.

Rural India added 4.3 million jobs in November leading to an increase in the employment rate from 37% in October to 37.5%. Jobs in urban India also witnessed a marginal increase, from 34.2% to 34.4%, last month, said the Centre for Monitoring Indian Economy (CMIE).

The Index of Consumer Sentiment (ICS) fell 0.2% in November after urban sentiment fell 1.5%, while rural India rose 0.5%, said the CMIE. The November 2022 ICS decline comes after two months of robust gains after rising somewhat sharply by 11.4% during the last two festival months.

In its weekly job analysis, CMIE underlined that the correction after the celebrations is understandable. It is important that this correction is comparatively small (0.2%) to the rise (11.4%).

The consolidation of consumer sentiment in November is based on the expectations that the economy will perform well in the near and medium-term future, especially in rural India. In addition, the Index of Current Economic Conditions (ICC) declined 1.6% in November, with a decline of 3.1% in urban India; the decline in rural ICC was more modest.

The ICS seems to have maintained its high level after the festival months, partly due to the onset of the wedding season. The CMIE observers expect this to continue for a few months and keep demand for consumer discretionary high.

Rural India is also promising as sowing of rabi plants appears to be progressing well. Higher production with increased prices for most agricultural products is a good sign, the experts added.

The World Bank revised its growth forecast for India in the current fiscal year to 6.9% from 6.5%, led by expected higher consumption and more robust domestic activity, which will help the country perform better than other emerging markets.

A report released by the World Bank on Tuesday said India is well-positioned to navigate external financial shocks. The country’s gross domestic product grew 6.3% in the July to September period—a decline from last quarter’s 13.5%—and has so far buffered itself from recessionary shocks facing other parts of the world.

The bank said global economic headwinds will likely take a toll on the country’s finances next year. It also changed its forecast for the financial year 2024, lowering it to 6.6% from 7%.

In a media briefing, World Bank senior economist Dhruv Sharma said that India’s overall fiscal deficit is expected to gradually decline over the next few years led by more efficient tax revenue collection. He added that the country is on track to meet its fiscal deficit target of 6.4% of GDP in the current financial year, while the general government deficit is expected to reduce to 9.6%. He underlined that the World Bank has no concerns about India’s debt sustainability at this stage.

Global airlines are predicting their first industry-wide profit in 2023, as air travel rebounds from COVID-19 restrictions. The trade association of world airlines, International Air Transport Association (IATA) on Tuesday said that it expects a net profit of $4.7-billion for the industry next year, with more than 4 billion passengers set to fly. It had previously said only that profits were “within reach” in 2023. For this year, the association narrowed its forecast for industry-wide losses to $6.9-billion from $9.7-billion.

Geneva-based IATA, which represents some 300 airlines comprising 83 per cent of global air traffic, also expects airlines to post a small net profit of $4.7 billion at a 0.6 per cent net profit margin. It will be the first profit earned by the airline industry since 2019 when net profits stood at $26.4 billion or 3.1 per cent net profit margin.

IATA director general, Willie Walsh, in an official statement, said the expected return to profit in 2023 is a great achievement keeping in mind the scale of the financial and economic damage caused by government-imposed pandemic restrictions. He, however, warned that many airlines will continue to struggle next year due to regulations, high costs and inconsistent government policies and other challenges.

Even as central banks across the world continue to raise their interest rates to limit growing inflation, India stands like an “oasis” in this era of uncertainty, says the latest Ecowrap report of SBI Research released on Friday.

In comparison to developed economies such as the US, the UK and Germany, the report shows India to have done noticeably better in areas of cost of living, food prices and energy costs. The report has been authored by Group Chief Economic Adviser of SBI Soumya Kanti Ghosh.

SBI Research compared the cost of living in India with the US, the UK and Germany by modifying each country’s exchange rate to achieve parity with the rupee and arrived at a comparable cost in rupee terms. The researchers found that if the household budget or cost of living was Rs 100 in September 2021 across all countries, it has now increased by Rs 12 in both the US and India, by Rs 20 in Germany, and Rs 23 in the UK. Similarly, in terms of rise in food and energy prices, India performed better than the US, the UK and Germany.

In an attempt to diversify its business activity beyond oil, the UAE capital city of Abu Dhabi is seeking more investments from India to not only benefit the local economy, but also allow Indian companies to use it as a platform to grow their footprints globally. The city has identified priority sectors such as agritech, tourism, healthcare, pharma and financial services, for Indian enterprises to invest.

Abdulla Abdul Aziz Alshamsi, Acting Director General of Abu Dhabi Investment Office (ADIO) told media that his office will assist all investment opportunities for Indian companies. He also called this to be a natural extension of the growing relations between India and the UAE.

Alshamsi said agricultural technology or agritech is an exciting sector keeping in mind the dry and arid climatic conditions of the Middle East, and the work done in the area can help solve global food security challenges. He cited the recently signed Free Trade Agreement with India for economic collaboration, saying it will not only help in trade of goods and services, but also help in knowledge sharing.

The India-UAE trade is valued at $72.8 billion in 2021-22, making the UAE India’s third largest trading partner after China and US, according to the Ministry of External Affairs.

The vast Indian diaspora will send home more than $100 billion in yearly remittances in 2022, says a World Bank report published on Wednesday. Asia’s third largest economy will reach the milestone figure for the first time, the report added.

Remittances are money transfers from migrant workers to families back home. These money transfers are an important source of income for households and help in reducing poverty and driving healthy social indicators such as higher school enrollment rates for children.

The World Bank report noted that over the last few years, Indians have moved from low-skilled employment in the Gulf countries to high-skilled jobs in high-income countries, and are able to send more money back home.

In 2021, the country received $89.4 billion in remittances, becoming its top recipient globally. Regardless of the anticipated new record this year, India’s remittance flows are likely to account for only 3% of its GDP, underlined the bank.

In addition to India, the other likely top recipients for remittances in 2022 are Mexico, China, and the Philippines. Globally, remittances to low and middle income nations are expected to grow an estimated 5% to $626 billion this year, added the World Bank.

Benchmark BSE Sensex crossed the 63,000 mark for the first time on Wednesday, extending its winning momentum to seventh day due to a largely positive trend in global markets and constant foreign fund inflows. The broader NSE Nifty also hit a record high at around 18,800.

Extending gains from the previous session, Indian stock indices rose on Tuesday morning and hit fresh lifetime highs. The Indian stock markets got the boost from strong inflows of foreign funds, relative strength of the Rupee, and a clue from the US Federal Reserve on slowing down on policy rates. The minutes of the US Fed’s latest monetary policy review meeting said a considerable majority of members judged that reducing the pace of increase in policy rates would possibly “soon be appropriate”.

Sensex and Nifty have made record highs after nearly a year. Their last highs were seen in October 2021, after which the markets began to move sideways and after six months corrected sharply.

Market observers have mixed responses to the jump in Indian market indices. Some believe that the undertone of the Indian market will remain bullish despite global headwinds with some intermittent corrections till the forthcoming Union Budget. Others suggest the global market construct to be not so favourable for the rally to continue unabated, and see the high valuation to be turning into a matter of concern.

The Tata Group on Tuesday announced the merger of its two airlines Vistara and Air India. With this consolidation, Air India will be India’s leading domestic and international carrier with a combined fleet of 218 aircraft, making it the largest international carrier and second-largest domestic carrier in the country.

Vistara is a 51:49 joint venture between Tata Sons and Singapore Airlines Limited. The airline was established in 2013 and is India’s leading full-service carrier with international operations in the Middle East, Asia and Europe.

As part of the merger transaction, Singapore Airlines shall also invest Rs 2,059 crore in Air India. Post the consolidation, Singapore Airlines shall hold 25.1 per cent shareholding in Air India. The transaction is estimated to be completed by March 2024.

Air India, an airline fully-owned by Tata Sons, has been the flag carrier of India. Tata Sons, via its fully-owned subsidiary Talace Private Limited or Talace, had acquired 100 per cent stake in Air India on January 27, 2022. After the merger, Air India’s fleet strength will grow to 218, second only to IndiGo’s 279. The consolidation is part of Tata groups’ strategy to bring its airline business under one roof.