India’s economy: torn between chaos, confusion and control
India’s economy is facing major challenges and stress in the post covid world. Although there are apologists of the economy that carp on its revival, and there are some improvements to the economy, the general consensus is that India’s economy has not yet recovered to pre-covid levels. In fact, the RBI in a recent article stated that it could take India as long as 12 years to recover to its pre-covid levels of economic growth and stability. Combined with economic indicators that show unemployment at around 9 per, youth unemployment at over 30 percent in some states, inflation on the rise, and a host of other factors, the short term prospects of the Indian economy (12 months) look bleak. Unfortunately, the middle term prospects (12-24 months ) look even bleaker.
| Indian Economy | ||||
|---|---|---|---|---|
| Details | Last | Previous | Value | Reference |
| Currency | 77.74 | 77.68 | – | Jun/22 |
| Stock Market | 55301 | 54892 | points | Jun/22 |
| GDP Growth Rate | 1.84 | 13.7 | percent | Dec/21 |
| GDP Annual Growth Rate | 4.1 | 5.4 | percent | Mar/22 |
| Unemployment Rate | 7.8 | 7.6 | percent | Apr/22 |
| Inflation Rate | 7.79 | 6.95 | percent | Apr/22 |
| Interest Rate | 4.9 | 4.4 | percent | Jun/22 |
| Cash Reserve Ratio | 4.5 | 4.5 | percent | Jun/22 |
Left out of the Indo-Pacific deal, China pushes toward the world’s largest trade deal
Amid the fanfare of U.S. President Joe Biden’s new Indo-Pacific strategy, China flew under the radar and hosted a high-level discussion on RCEP, the world’s largest trade pact.
It came days after the Biden administration launched the Indo-Pacific Economic Framework, or IPEF — a partnership which involves 13 countries, excluding China, as the U.S. seeks to expand its political and economic leadership in the Indo-Pacific region.
The Regional Comprehensive Economic Partnership (RCEP) meeting in the southern island of Hainan underscored analysts’ expectations that instead of reacting to or countering IPEF, China will likely forge ahead with agreed-upon trade pacts and capitalize on ready-to-go tariffs and market accesses.
“China will not take immediate or very targeted measures to respond to the IPEF,” said Li Xirui, a trade scholar at the S. Rajaratnam School of International Studies at Singapore’s Nanyang Technological University.
At the second RCEP Media & Think Tank Forum, held in the Hainan capital of Haikou the weekend after IPEF was announced, non-government trade experts across the region gathered to discuss more ways to expand trade within the bloc.
| Economy Of China | ||||
|---|---|---|---|---|
| Details | Last | Previous | Value | Reference |
| Currency | 6.67 | 6.7 | – | Jun/22 |
| Stock Market | 3239 | 3264 | points | Jun/22 |
| GDP Growth Rate | 1.3 | 1.5 | percent | Mar/22 |
| GDP Annual Growth Rate | 4.8 | 4 | percent | Mar/22 |
| Unemployment Rate | 6.1 | 5.8 | percent | Apr/22 |
| Inflation Rate | 2.1 | 1.5 | percent | Apr/22 |
| Inflation Rate Mom | 0.4 | 0 | percent | Apr/22 |
| Interest Rate | 3.7 | 3.7 | percent | Jun/22 |
Japan’s economic clout wanes in Southeast Asia
Japan is losing its presence in Southeast Asia, the engine of global growth.
China already tops Japan in trade with the Association of Southeast Asian Nations and South Korea is catching up fast. This trend has accelerated due in part to Tokyo’s decision to close the border to keep the coronavirus pandemic at bay.
Japan competed with the U.S. for the top spot as ASEAN’s biggest trading partner for five years through 2008 before China boosted its trade value, according to the ASEAN Secretariat. After outstripping Japan in 2009, China nearly trebled its lead in 2021. In 2003, Japan’s ASEAN trade was three times bigger than South Korea’s, but the gap narrowed to 1.3 times in 2021.
Japan’s annual direct investment in ASEAN totaled $14.85 billion in 2012, the third-largest after intraregional investment and the U.S., but the amount fell to sixth place at $8.52 billion in 2020.
Japan’s diminishing presence can also be seen in the flow of people. Japan accounted for 10 percent of people who visited ASEAN countries from other Asian regions in 2020, down from 16 percent in 2012. Visits by high-ranking government officials and corporate executives fell due to Japan’s strict COVID-19 quarantine measures that some ridiculed as a “closed-door policy.”
| Economic Statistics Of Japan | ||||
|---|---|---|---|---|
| Details | Last | Previous | Value | Reference |
| Currency | 133 | 134 | Jun/22 | |
| Stock Market | 28247 | 28234 | points | Jun/22 |
| GDP Growth Rate | -0.1 | 1 | percent | Mar/22 |
| GDP Annual Growth Rate | 0.2 | 0.4 | percent | Mar/22 |
| GDP Growth Annualized | -0.5 | 4 | percent | Mar/22 |
| Unemployment Rate | 2.5 | 2.6 | percent | Apr/22 |
| Inflation Rate | 2.5 | 1.2 | percent | Apr/22 |
| Inflation Rate Mom | 0.4 | 0.4 | percent | Apr/22 |
Australian PM signals stronger ties with Indonesia on security, climate
Australian Prime Minister Anthony Albanese heralded a deepening relationship with close neighbour Indonesia, pledging stronger cooperation on trade, security and climate change during his first bilateral foreign visit on Monday.
Albanese accompanied his host, President Joko Widodo, for a ride through the presidential palace in the town of Bogor on bamboo bicycles before they began their formal talks.
Stressing the importance of engaging with Southeast Asia’s largest economy, the new Australian prime minister brought a high-profile business delegation, along with Foreign Minister Penny Wong and Trade Minister Don Farrell.
“Indonesia is on track to be one of the world’s five largest economies,” said Albanese, “Revitalising our trade and investment relationship is a priority for my government.”
Albanese travelled to Japan for a meting of the Quad group of countries, which includes United States, India and Japan, the day after he was sworn into office in May. His Indonesia visit is his first for one-on-one talks with a foreign leader.
Poverty rate of Maldives falls by 7pc in 2021
World Bank in its latest Maldives Development Update (MDU) revealed that the island nation’s poverty rate dropped by 7 percent in 2021.
The drop in poverty rate in the Maldives was strongly attributed to the significant recovery made by the tourism industry, and as such service exports and tourism-linked revenue collections improved in 2021.
This was reflective on the drop in the country’s current account deficit and the improvement of the overall fiscal position of Maldives.
World Bank reported that all economic sectors with the exception of construction had significantly bounced back.
While poverty rate rose sharply by 11 percent in 2020 due to the Covid-19 pandemic outbreak, it was estimated to have slipped by 4 percent in 2021.
This prospective and progressive trend is expected to continue into the current year, mostly owing to the increment in the capacity of the tourism sector.
The tourism sector activities increased due to new resort openings as well as the completion of Velana International Airport’s expansion project.
Additionally, the recommencement of inbound Chinese travelers to the island nation had resulted in significant improvement of the Chinese tourist market to the Maldives.
Meanwhile tourism industry along with overall economy of the Maldives are expected to make full recovery, and reach pre-pandemic levels by 2023.
Despite improvements in the tourism industry, the persisting geopolitical tension between Russia and Ukraine following the former’s decision to invade the latter, arrivals from the two markets are expected to deplete in 2022 if the conflict is prolonged.
How Nepal can avert an economic crunch
The Covid-19 pandemic adversely impacted the global production and supply chain. Rising food prices reversed decades-long gains in poverty alleviation, pushing millions around the world into food insecurity.
Global recovery has been uneven with economic growth concentrated in some major economies, and most developing countries and emerging markets lagging behind.
Nepal’s agriculture, infrastructure, construction, industry, tourism, supply chain and other service sectors have been been hit hard. Hundreds of thousands have lost their jobs, especially daily wage workers, small and medium enterprises, as well as marginalised and economically disadvantaged communities, pushing them deeper into poverty.
And just as the worst of the pandemic and the economic collapse was over, the global economy was shaken off course by Russia’s invasion of Ukraine, with the effects reverberating across the world and in Nepal. Experts are concerned that any economic recovery program, weakened by the global pandemic and war, will be largely ineffective.
A recent research conducted by the Policy Research Institute on the policies, tactics and strategies adopted by developed countries in pandemic management has found that the Ukraine crisis has increased the trade deficit and depleted foreign exchange reserves of developing nations like Nepal. Indeed, Nepal depends heavily on the import of food grains, crude oil, medicine, fossil fuel, motor parts, and other commodities.
Sri Lanka continues to reel under an economic crisis brought on by the country having adopted some of the worst economic policies for decades, and exacerbated by the decline of foreign exchange reserves due to the loss of tourism and remittance during the pandemic.
Sri Lanka’s economic crisis threatens its dollar-earning it firms
There have been days when cybersecurity professional Asela Waidyalankara and his colleagues have sat in hotel lobbies to complete projects during power outages. Other days, they have run around Colombo looking for fuel for generators so they could work from home.
“We have a buddy system at the company to inform each other about fuel availability,” laughs Waidyalankara, adding that his company encourages staff to carpool if they have to attend meetings in Colombo and work from home when possible.
Before the pandemic, Sri Lanka’s IT industry employed more than 120,000 people and was the fifth-largest export earner for the island nation of 22 million. It was on track to become the top exporter within the next five years and double its employees. But with the government of President Gotabaya Rajapaksa having defaulted on its foreign debt earlier this year and critical shortages crippling the economy, those plans are now in jeopardy as it becomes harder to maintain normal business operations.
Daily, hours-long power cuts are now normal. Fuel queues stretch for kilometres, sometimes so far that one fuel queue meets another. The country is running on a cash flow basis. “We are using whatever dollars that flow in to purchase the essentials we can,” Nandalal Weerasinghe, governor of the Central Bank of Sri Lanka (CBSL), said last month.