Category: Economy

After five months of negotiations, Israel and the United Arab Emirates finalized a free trade deal which is regarded as a “significant and historic milestone.” As per a statement released by the ministry, customs duties will be abolished on 96 % of products such as agriculture, food, cosmetics, medicine, and medical equipment. Many products will get immediate custom duty exemption while others gradually. Israel’s Economic Ministry said that the free trade agreement to be signed between both countries on Tuesday would help boost trade and foster economic relations between both countries.

Free trade talks started in November 2021. In December, Israeli Prime Minister Naftali Bennett visited Abu Dhabi and discussed the free trade talks with the then Crown Prince Sheikh Mohammed bin Zayed Al Nahyan (MBZ), the current president of UAE. The two leaders decided to be quick with further discussions. The trade deal makes it Israel’s first with an Arab country.

Israeli PM Bennett said in a statement that the good relations that have already been created between UAE and Israel are being strengthened in the form of a free trade deal, which will significantly improve the economic cooperation for the good of the citizens of both countries.

The US surpassed China and became India’s biggest trading partner with $119.42 billion for the fiscal years 2021–2021, compared with $80.51 billion in 2020–2021. With a trade deficit of $72.9 billion with China, India’s trade surplus accounted for $32.7 billion with the US.

According to the data, a major increase was seen in exports, which amounted to $76,111.33 billion in 2021–2022 from $51.62 billion in 2020–21 and imports rose from $29 billion in 2020–21 to $43.31 billion. Meanwhile, India’s merchandise exports reached a new record high in April by crossing $40 billion, representing a 30% increase over April 2021.

The annual trade between the US and China was $115.42 billion in 2021–2022 compared to $86.4 billion in 2020–2021, in which exports showed a marginal increase from $21.18 billion to 21.25 billion. However, imports rose from $65.21 billion in 2020–2021 to $94.16 billion in 2021–2022.

The data reflects the deepening trade ties and growing bilateral trade between India and the US in the coming years. Both nations are focusing on strengthening their economic ties.

From 2013 to 2021, China was India’s biggest trading partner, and before that, the UAE was India’s biggest trading partner.

New Zealand Prime Minister Jacinda Ardern has asked the United States to return to a regional trade deal it quit in 2017, in the latest signal by an Asia-Pacific leader that US President Biden’s economic engagement with the Indo-Pacific region is not up to the mark.

The New Zealand leader, who is currently in the US said that the trade agreement, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), was the “gold standard” for boosting economic ties. She added that if the United States was keen on economic engagement in the region, then CPTPP was the place to do it. The Biden administration has been unwilling to return to the agreement due to concerns about U.S jobs being shipped overseas.

Arden’s US trip is aimed primarily at boosting exports and tourists as the country sets off to reopen its borders completely after more than two years of restrictions due to the Coronavirus pandemic. Ardern will be traveling to New York, Washington, DC, Boston, San Francisco, and Seattle, and would hold meetings with the U.N Secretary-General Antonio Guterres and senior officials from Twitter, Microsoft, and Amazon. Ardern, who is on a road to recovery from a recent case of COVID-19, has until now not announced plans to visit the US president at the White House, due to strict pandemic protocols.

The Quad summit comprising India, the US, Japan, and Australia agreed to invest $50 billion for “tangible benefits to the region” as part of a series of initiatives. The leader agreed to offer infrastructure development in the Indo-Pacific region for the next five years.

In particular, these four nations have identified vulnerabilities in global semiconductor supply chains and resolved to collaborate to create a market that is both diverse and competitive by using their strengths.

Additionally, the Quad released a Common Statement of Principles on Vital Technology Supply Chains that boost cooperation in semiconductors and other critical technologies and reduce regional risks. The countries have also agreed to broaden their collaboration in 5G technology by signing a memorandum of understanding (MoU) on supplier diversification and interoperability standards.

Prime Minister Narendra Mod said that this will ensure “open and secure telecommunications technologies in the region” and called the structure “effective”.

A joint statement was released from the leaders on the infrastructure front, “We are committed to working closely with partners and the region to drive public and private investment to bridge gaps.” To achieve this, Quad will seek to extend more than $50 billion of infrastructure assistance and investment in the Indo-Pacific over the next five years.”

As equity rallied in India on Wednesday, the rupee appreciated by five paise to 77.52 against the dollar (21.12 against the UAE dirham) in the opening trade, but the increase in oil prices and unabated capital outlaws increased investor sentiments.

India’s interbank foreign currency rates versus the US dollar opened at 77.54 and then jumped to 77.52, up to five paise from the previous closing. The dollar index that measures the greenback’s strength against a basket of six currencies was up 0.06% higher at 101.92.

Early trades ranged from 77.54 to 77.51. Against the American dollar, the rupee closed at 77.57 in the previous session. The 30-share Sensex rose by 242.62 points, or 0.45 percent, to 54,295.23 points, while the broader NSE Nifty rose by 68.85 points, or 0.43 percent, to 16,194 points.

Brent crude futures surged 1.20 percent to $114.92 per barrel, the benchmark price for global oil. The government announced a record reduction of Rs 8 per liter in petrol excise duty and Rs 6 per liter in diesel excise duty on Saturday.

Prime Minister Narendra Modi who is on a two-day visit to Japan to participate in the Quad Summit met the leaders of large and successful business organizations namely Softbank, Suzuki, NEC Corp and Uniqlo.

Modi met the founder and  board director of Softbank Corporation, Masayoshi Son and lauded his company’s role in the start-up sector. They talked about the future possibilities of the company’s participation in vital zones such as technology, finance and energy. The discussion also centered around the numerous changes that have been made in order to make business between two countries easy and schemes developed whereby Japan could make more investments in India.

The PM also had a talk with the senior advisor of the Suzuki Motor Corporation Mr Osamu Suzuki and looked back on Suzuki’s connection and contributions in Japan. The conversation also dealt in topics like future investment opportunities in India such as building manufacturing facilities for electrically and battery operated vehicles as well as setting up of centers for recycling. They also discussed plans to help grow indigenous technology, including skill development by way of collaborating with Japan- India institutes of Manufacturing(JIM) and Japanese Endowed Courses ( JEC).

PM Modi also met leaders of Industry Giants like NEC Corporation, Fast Retailing and Uniqlo.

India will join the US-led Indo-Pacific Economic Forum (IPEF) launched by President Joe Biden next week in Tokyo. The mega ‘economic arrangement’ is established in an effort to counter China’s rising economic clout.

According to a top-level source, Biden will extend an invitation to Prime Minister Narendra Modi to join the IPEF in their meeting in Tokyo for Quad Summit. However, a source said India was initially reluctant to join the IPEF and was keen to have a bilateral trade pact with the US and plurilateral agreement under the Quad that included the US, India, Australia and Japan.

The IPEF will also have South Korea, Japan, Australia, New Zealand, Malaysia, Indonesia, Singapore, Vietnam, Thailand and the Philippines as members and more will be added later.

During Nirmala Sitharaman’s visit to the US last month, India and the US reached an understanding that although the IPEF will demand “high standards” by way of establishing and maintaining trade facilitation, supply-chain resilience and the infrastructure will nevertheless be a “strategic move” to target China.

Nevertheless, sources said New Delhi believes that even though IPEF is not a free trade agreement, it will help India deal with the China threat, as Beijing attempts to dominate all supply-chain linkages in Asia under the Regional Comprehensive Economic Partnership (RCEP), which was ratified on the 1 January 2022.

The World Bank released a statement on Wednesday. It will provide $30 billion to help ease the food crisis threatened by Russia’s war in Ukraine, which has suspended almost all grain exports from the two countries. It added that $12 billion would be given to new projects and over $18 billion from current food and nutrition-related projects that have been approved but have not yet been donated.

World Bank Group President David Malpass said the increasing food prices are ruining the impoverished and the vulnerable. He added it is important for countries to state clearly the future output increase to inform and stabilize food markets.

The new projects are considered assisting agriculture, act as a shield against the effects of higher prices on the poor, and aid water and irrigation projects. Most of the resources will be going to Africa and the Middle East, Eastern Europe, Central Asia, and South Asia, as these areas have suffered the harsh effects of the war in Ukraine on food supplies.

Countries such as Egypt hugely depend on wheat from Ukraine and Russia and are struggling for supplies, as Russia has sealed off Ukraine’s agricultural exports from the ports of the Black Sea and has imposed limitations on domestic export.

Contrasting to the global growth rate of 3.1%, India’s growth is projected to grow by 6.4% in 2022. According to the UN report, India is the fastest-growing major economy with higher inflationary pressures and uneven recovery of the labour market suppressing private consumption and investment.

The Global economic growth is now projected to grow by 3.1% in 2022, down from the forecast of 4% growth released in January 2022. The Global inflation rate is also projected to increase to 6.7% in 2022, more than double the rate of 2.9% between 2010 and 2020, it said.

The World Economic Situation and Prospects (WESP) report of the UN Department of Economic and Social Affairs said in its Wednesday release that the war has drastically changed the fragile economic recovery from the pandemic. It has triggered the catastrophic humanitarian crisis in Europe that led to an increase in food and commodity prices along with the global exacerbating inflationary pressures.

The outlook in South Asia has deteriorated in recent months as per the report due to the conflict in Ukraine, higher commodity prices, and possible spillover effects of monetary tightening in the United States.

Zimbabwe’s President Emmerson Mnangagwa has imposed capital control to stem currency depreciation. The country has become Africa’s worst-performing currency after the Zimbabwean dollar lost half of its value in the current year.

In a televised speech Mnangagwa ordered all the banks in the country to stop lending with immediate effect to minimise the creation of broad money that is prone to manipulate or abuse the exchange rate. He said, “Banks shall with immediate effect and not process third-party country foreign payments. Third-party foreign payments are susceptible to illicit financial flows which prejudice the country of its hard-earned foreign currency resources”.

The new measures were taken to support the currency amid the growing threat of the economy dollar mining for the second time since 2009. Back then the nation officially turned to the U.S. dollars after hyperinflation soared.

Additionally, these new measures reverse the administration’s tendency to favour the US dollar, which undermined the local currency reintroduced in February 2019. The payment for state employees’ salaries, Covid-19 allowances, and annual bonuses was paid in U.S. dollars last year.

The largest insurer in the country Old Mutual warned earlier in its quarterly economic brief that the dollarization is inevitable to stabilize prices. In April the inflation soared to 96.4% from 72.7%.