By Pavas Gupta
Last week, the world economy saw a relative cooling down, despite the rupee plunging to apocalyptically-low levels. Talks of improvement in United States-China relations brought much-needed relief to the global stock market, even as repercussions from the Trade War turned India into a net importer of steel. Here are all the stories from the world economy you may have missed last week.
US China relations bring hope to world stocks as they agree to talks
Friday saw a rise in world stocks as news of the US and China agreeing to talks made rounds, after a long-drawn-out tariff war. According to a statement by Chinas Ministry of Commerce, a Chinese delegation led by Vice-Minister for Commerce Wang Shouwen will meet with US representatives for talks on the matter.
The Wall Street Journal reports that the talks are slated for August 21 and 22. This comes a day before two of the worlds biggest economies are due to slap tariffs on billions of dollars worth of each others goods, in addition to levies that took effect of July 9. For now it appears an escalation has become less likely, hence yesterday’s rebound in equity markets, quoted CMC Markets analyst Michael Hewson.
Income of agricultural households 23% higher than non-agricultural households
The income of farm households, which accounts for nearly half the rural households in India, surged to Rs 1,07,172 at an annual compound growth rate (CAGR) of 12% since 2012-13.
As per a rural survey conducted by the National Bank for Agricultural and Rural Development (NABARD), all households, both farm and non-farm, reported an average annual income of Rs 96,708. At the same time, the average annual income levels of non-farm households stood at Rs 87,228 in 2015-16.
India Ratings: Possible for Indias GDP growth to leap to 8.5-9%
The Indian economy needs to gear up if it wishes to achieve a higher Gross Domestic Product (GDP) rate in the coming years, a top India Ratings official stipulated.
If India needs to achieve a growth rate of 8.5-9 per cent, then all the factors should grow simultaneously. Around 60 per cent of GDP comes from private final consumption expenditure, said Sunil Kumar Sinha, Director (Public Finance) and Principal Economist, India Ratings.
According to Sinha, personal consumption expenditure and government final consumption expenditure (GFCE) look fine, but the primary focus areas are gross fixed capital formation or investment and exports.
Nomura: Indias current account deficit expected to widen
Indias current account deficit is expected to widen to 2.8% of the Gross Domestic Product (GDP) this fiscal year, according to a report by Nomura. The primary concerns include rising oil prices, a steeply-depreciating rupee, and outflow of portfolio investments.
“Overall, we expect the current account deficit to widen to 2.8 per cent of GDP in FY19 from 1.9 per cent in FY18,” the Japanese financial services major said. It further added that Balance of Payments (BoP) will continue to pose a challenge in Fiscal Year 2019 as both BoP and portfolio flows remain negative.
Japanese and South Korean steel exports to India surge on tariffs and high-end demand
As per a government document, India is being inundated by a wave of steel from producers in Japan and South Korea as mills in the countries redirect supply after US President Donald Trump slapped import duties on the alloy earlier this year.
In April, Indias steel imports from South Korea rose 31% from the previous year, while those from Japan surged by 30%, according to an internal document from the Ministry of Steel that was reviewed by Reuters.
The flood of imports is so big that India is now a net importer of steel, with foreign supplies reaching 2.1 million tonnes, 15% higher than a year earlier.
Pavas Gupta is a writing analyst at Qrius