Category: Economy

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%.

Production at U.S. factories jumped up more than expected in April in the middle of a never-ending heavy demand for motor vehicles and other items, which should help to support manufacturing work.

The Federal Reserve, on Tuesday, said that the manufacturing output increased 0.8% in April after a similar rise in March. But manufacturing, which is 12% of the economy, is facing difficulties from renewed supply chain bottlenecks because of the Russia- Ukraine war and China’s zero-tolerance COVID-19 policy.

In April, the index of national factory activity of the Institute for Supply Management hit more than a 1-1/2-year low. A survey on Monday from the New York Fed revealed that factory activity in New York State went down in May for the third time in 2022.

The dollar has gained 2.7% against the currencies of the major trade partners of the USA because of Fed increasing interest rates in March. This could hit the demand for exports and undersell manufacturing.

Auto plant production increased by 3.9% in April after shooting to 8.3% in March. The increasing crude oil prices have given a boost to the production at mines. Utility production bounced back 2.4% after going down 0.3% in March.

On the 25^th-anniversary celebration of the Telecom Regulatory Authority of India (TRAI) held on Tuesday, Prime Minister Narendra Modi launched a 5G Test Bed, a project collectively handled by eight institutes, led by IIT Madras, and also released a postal stamp.

PM Modi was the chief guest of the silver jubilee celebrations that he attended via video conferencing. The PM stated that the 5G technology will bring constructive changes in the country’s administration, make living easy, facilitate doing business, and create employment opportunities. All sectors, including agriculture, education, infrastructure, health, and logistics, will benefit from the 5g technology. It will also help new businesses and industry people test their products indigenously and lessen their dependence on foreign equipment and solutions. The 5G Test Bed, the construction of which cost a whopping 220 cores, will make the country self-reliant.

The PM called forward youngsters, researchers, and companies to make use of the testing facility for making 5G technology. The PM also added that the 5G telecom network will boost India’s economy by $450 billion in the next 15 years and by 2030, India should be able to launch 6G services, work on which has already started.

The other project participants were IIT Delhi, IIT Hyderabad, IIT Bombay, IIT Kanpur, IISc Bangalore, Society for Applied Microwave Electronics Engineering and Research (SAMEER), and Centre of Excellence in Wireless Technology (CEWiT).

The United States and the European Union have collaborated to enhance the manufacturing of microchips and see to Russian false information around the war in Ukraine.

The two sides came together outside Paris as part of the Trade and Technology Council (TTC), a council that was formed in 2021 and predominantly targeted to hit back at China’s growing power in technology. But much of their discussions centered on Russia and blamed Moscow for an “all-out assault on the truth”. They promised to deal with Russian disinformation accusing Moscow of blaming Western sanctions for the scarcity of food supply in Asia and Africa. EU and US officers vowed to give the business of chip manufacturing the maximum obtainable subsidies, but they would require funds to stay away from “subsidy races”.

 EU competition commissioner Margrethe Vestager told a public briefing in Saclay, a technology hub in the south-western suburbs of Paris, that the damage from the Russian invasion of Ukraine can be seen spreading all over the world. The forum also said it would boost access to “trustworthy and fact-based information” by rendering support like funding.

 The working groups of TTC, which held its first meeting in September 2021 in Pittsburgh, USA, look into issues from Artificial Intelligence to the management of exports.

China and the US are competing to influence the telecommunication sector in Africa. Within a short period, Africa has become the new frontier for the mobile phone sector.

Last week, Ethiopia launched a 5G network powered by Chinese telecom giant Huawei in Addis Ababa. Just before that, during a visit to the continent, U.S. Deputy Secretary of State Wendy Sherman visited the offices of U.S. mobile company Africell in Angola. The company has attracted more than 2 million users since launched just a month ago.

She tweeted later, “Today in Luanda, I visited @AfricellAo, an innovative, state-of-the-art U.S. company expanding 5G access in Angola with trusted technology components”.

Beijing has long been accused of trying to monopolize networks and use them for espionage by Washington, while Huawei has denied such claims repeatedly. To which Sherman said, “So we’ve been very public about our concern about Huawei, and so we are glad that Africell can provide to the people of Angola a safe, capable tool in their hands to reach out to the world”. ​​Beijing was incensed by the deputy secretary’s comments, which were met with a stern rebuke from Foreign Ministry spokesman Zhao Lijian.

The Comprehensive Economic Partnership Agreement (CEPA), between India and the UAE which was signed on February 18 and was made effective from May 1 will augment the remittance corridor between the two countries besides creating a conducive environment to produce interoperable digital solutions, according to LuLu Financial Holdings, a topmost financial services company.

 LuLu Financial Holdings, which has its headquarters in Abu Dhabi, is involved in cross-border payments and has numerous investments in the UAE and India. It operates in 11 countries and runs business deals worth more than USD 8 billion every year.

The CEPA agreement includes goods trade, service trade, and rules of origin, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures.

 Adeeb Ahamed, LuLu Financial Holdings’ Managing Director, who is currently in Delhi as part of a top-level delegation from UAE visiting India told PTI that the India-UAE relation currently is at the topmost level and several UAE Companies are interested to invest in India. He further added that the aim was to build a foundation that could profit many diverse sectors such as trade, digital, goods, and services.

 With the Fintech industry expanding by leaps and bounds in India and UAE, he said it was necessary to make low-cost payments for the masses, which would need larger access to critical technologies, new investments, and indigenous solutions that can allow instant cash transfer on mobile payment solutions.

The East African nations of Uganda and Tanzania have signed MOU on defence and security for the East African Crude Oil Pipeline project.

The pact, on behalf of both nations, was signed by Uganda’s Minister of Defence and Veteran Affairs Vincent Bamulangaki Ssempijja and Tanzania’s minister for Defence and National Service Dr. Stergomena, at Protea Skyz Hotel, Kampala.

Ssempijja remarked that the president of both countries prioritized fostering the relations between the two countries on their agenda by signing an agreement for defence and security cooperation. He also expressed his happiness in reviewing and signing the Memorandum of Understanding (MOU) on Defence and Security cooperation besides putting into use the intergovernmental security committee for the Oil Pipeline project. He added that this would allow the institutions of both countries to exchange information and work in collaboration to stand up to threats like terrorism, cyber security, drug trafficking, and others.

Dr. Stergomena L. Tax said the meeting offered Uganda and Tanzania a chance to contemplate matters pertaining to both countries and put together a mutual understanding and proceed towards peace and security. She cited that terrorism posed a major threat that requires combined efforts and cooperation of both countries.