India’s growth may have macroeconomic costs

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Public Debt ◽  
Central Government ◽  
Content Type ◽  
Reserve Bank ◽  
Growth Prospects ◽  
Repo Rate ◽  
Bankruptcy Code ◽  
Bad Debt ◽  
Reserve Bank Of India

Subject Indian growth is high but public debt is rising. Significance Despite evidence that demonetisation slowed the economy in the first quarter of 2017, India is likely to revert again to being one of the fastest growing economies in the world. However, India’s level of public debt is higher than in many other emerging markets while bank credit is slowing, threatening the country’s growth prospects. Impacts Central government will increase expenditure on investment. The Reserve Bank of India (RBI) will be pressed to cut interest rates further, after today reducing the repo rate by 25 basis points to 6%. India’s new Insolvency and Bankruptcy Code should help to ease the problem of bad debt and non-performing loans.

India’s remedy for bad debt may not bring relief

2017 ◽  
Keyword(s):  
Prime Minister ◽  
Banking System ◽  
Job Creation ◽  
Bank Credit ◽  
Content Type ◽  
Reserve Bank ◽  
Bankruptcy Code ◽  
The Government ◽  
Bad Debt ◽  
Reserve Bank Of India

Subject Implementation of India's new Insolvency and Bankruptcy Code. Significance Shrinking bank credit is hindering India’s ability to finance spending. The Reserve Bank of India (RBI) is relying on the recently instituted Insolvency and Bankruptcy Code (IBC) as the principal instrument to address the problem of stressed assets in the banking system. Impacts The government may accelerate plans to merge stronger and weaker PSBs. Indian corporates may increase their issue of bonds denominated in domestic currency. Prime Minister Narendra Modi will emphasise job creation rather than investment until the next election.

India’s central bank will be more amenable to Modi

2019 ◽  
Keyword(s):  
Prime Minister ◽  
Fiscal Year ◽  
Gdp Growth ◽  
Content Type ◽  
Reserve Bank ◽  
Bharatiya Janata Party ◽  
Consecutive Term ◽  
Indian Banks ◽  
Bad Debt ◽  
Reserve Bank Of India

Subject RBI under new governorship. Significance Shaktikanta Das was last month appointed Reserve Bank of India (RBI) governor after Urjit Patel resigned. Prime Minister Narendra Modi’s government had for several months clashed with the RBI over how to foster economic growth. The general election is likely in April or May, when Modi’s Bharatiya Janata Party (BJP) faces a tough fight to win a second consecutive term. Impacts In election campaigning, Modi will emphasise India’s mostly robust quarterly GDP growth figures during his term. Indian banks’ level of bad debt could decrease by the end of the fiscal year ending March 2019. India will likely widen its fiscal deficit target for 2018/19 (3.3% of GDP) ahead of the 2019/20 budget.

Delhi’s key think tank will urge state intervention

2017 ◽  
Keyword(s):  
Economic Policy ◽  
Interest Rates ◽  
State Intervention ◽  
Think Tank ◽  
Fiscal Stimulus ◽  
Content Type ◽  
Reserve Bank ◽  
Key Policy ◽  
Reserve Bank Of India ◽  
Stimulus Package

Subject Economic policy of the Indian government's key policy think tank. Significance The resignation last month of Arvind Panagariya as vice chairman of the NITI (National Institution for Transforming India) Aayog, and his replacement by Rajiv Kumar, signals a shift in the direction of Prime Minister Narendra Modi’s economic policy. Panagariya is a strong advocate of globalisation and ‘liberal’ economic reform. Kumar has spent most of his career in India and supports a greater role for the state in the economy. Impacts Delhi will soon announce a new fiscal stimulus package. The Reserve Bank of India (RBI) will come under increasing pressure to lower interest rates further. The Swadeshi Jagran Manch lobby group, which promotes the economic ideals of Hindu nationalism, may become more influential.

India’s banks will struggle to inspire confidence

2020 ◽  
Keyword(s):  
Private Sector ◽  
Banking Sector ◽  
The State ◽  
Regulatory Oversight ◽  
Content Type ◽  
Shadow Banks ◽  
Reserve Bank ◽  
High Level ◽  
Bad Debt ◽  
Reserve Bank Of India

Subject Problems in India's banking sector. Significance The Reserve Bank of India (RBI) earlier this month stepped in to rescue imperilled Yes Bank. The private sector lender had accumulated a high level of bad debt. Impacts Indian borrowers will be increasingly distrustful of shadow banks as well as banks. The State Bank of India could come under strain owing to its need to support Yes Bank financially. The RBI will come under growing pressure to improve its regulatory oversight of the banking sector.

Further South African interest rate cuts are unlikely

2018 ◽  
Keyword(s):  
Interest Rates ◽  
South African ◽  
Structural Reforms ◽  
Short Term ◽  
Content Type ◽  
Reserve Bank ◽  
Capital Outflows ◽  
Repo Rate ◽  
Low Levels ◽  
Domestic Inflation

Subject South African inflation dynamics. Significance South African Reserve Bank (SARB) Governor Lesetja Kganyago highlighted in a May 8 speech the increasingly unpredictable global environment and risks to inflation. Domestic inflation has been at unusually low levels in recent months, surprising the market and SARB on the downside thanks mainly to currency strength and moderating food price pressures. On March 28, the SARB cut the benchmark repo rate for only the second time in six years. However, international factors have seen the currency come under pressure recently, reversing the gains seen following President Cyril Ramaphosa’s ascent to the ANC leadership in December. Impacts With monetary policy likely proving cautious in the short term, pressure will grow on Ramaphosa to push through structural reforms. Holding interest rates constant will help to mitigate capital outflows and provide some support for the currency. Barring a currency crash, the next interest rates move will likely be up -- late this year or next year.

Congress party will likely lead 2019 anti-Modi front

2018 ◽  
Keyword(s):  
Madhya Pradesh ◽  
General Election ◽  
Content Type ◽  
The North ◽  
Congress Party ◽  
Reserve Bank ◽  
Bharatiya Janata Party ◽  
Reserve Bank Of India ◽  
Opposition Parties

Significance Party President Rahul Gandhi’s Congress displaced the Bharatiya Janata Party (BJP) from power in Chhattisgarh, Madhya Pradesh and Rajasthan, all in the nationally ruling party’s ‘Hindu-Hindi’ heartland and with large rural constituencies. In recent months, opposition parties including Congress have been in talks about possibly forming a broad anti-BJP front to challenge Modi in the general election, likely in April or May next year. Impacts More farmer-led protests are likely ahead of the general election. Outbreaks of Hindu-Muslim violence are likely, especially in the north and west. Modi’s government will press the Reserve Bank of India to release more reserves and cut rates, hoping to boost growth.

Prospects for South Africa in 2020

2019 ◽  
Keyword(s):  
South Africa ◽  
Public Debt ◽  
Local Elections ◽  
Strategic Manoeuvring ◽  
Content Type ◽  
Rating Agency ◽  
Growth Prospects ◽  
Leadership Changes ◽  
Opposition Parties

Subject Prospects for South Africa in 2020. Significance Fiscal woes and muted growth prospects are weighing heavily on President Cyril Ramaphosa’s government as it attempts to stabilise ailing state-owned enterprises (SOEs) and rein in public debt amid the prospect of further rating agency downgrades. Anti-corruption reforms are gaining momentum, while opposition parties undertake leadership changes and strategic manoeuvring ahead of the 2021 local elections.

New Zealand COVID-19 fightback prospects are positive

2020 ◽  
Keyword(s):  
New Zealand ◽  
Political Parties ◽  
Interest Rates ◽  
Financial Market ◽  
Media Coverage ◽  
Market Liquidity ◽  
Content Type ◽  
Reserve Bank ◽  
Global Demand ◽  
The Government

Significance The government has locked the country down for four weeks and legislated to borrow up 52 million dollars (30.7 million US dollars), equivalent to 17% of GDP. The Reserve Bank of New Zealand (RBNZ) is using several monetary policy tools to meet its inflation and employment targets, keep interest rates low and support financial market liquidity. Impacts Tourism, the largest export-earner, and high-earners logging and education, will suffer. Dairy, meat and horticultural exports will be shielded by continuing global demand, aided by a weak New Zealand dollar. The country heads into the COVID-19 crisis with low debt-to-GDP, but debt taken out now will take a future toll. Opposition and minor political parties will get reduced media coverage, while the September general election may be delayed.

Rising geopolitical concerns will help gold gain more

2020 ◽  
Keyword(s):  
Interest Rates ◽  
Precious Metals ◽  
Organised Crime ◽  
Gold Price ◽  
Price Ratio ◽  
Content Type ◽  
Gold Market ◽  
Reserve Bank ◽  
The Us ◽  
Copper Gold

Subject Gold market dynamics. Significance The gold price rose above 1,570 dollars per troy ounce this week for the first time since April 2013. This follows a near-20% gain last year, the largest in a decade. Moreover, this came as the dollar largely flatlined last year, and the unusual extent to which the gold price outpaced the dollar led it to a record price in many local currencies. Interest rates fell worldwide in 2019 and long positions in gold, which benefit when it increases in value, tripled compared to the 2014-18 average. Impacts Stoking interest in the market, the Reserve Bank of India is offering senior gold bonds yielding 2.5%, and discounts for online buyers. A headwind is US prosecutors' labelling JP Morgan’s precious metals desk a 'criminal enterprise', a term often linked to organised crime. The cryptocurrency market is seeing the issuance of gold-backed tokens surge; Tether Gold is 100% backed by bullion reserves. Gold is benefiting from the growth in wireless applications for 5G infrastructure, offsetting demand losses from other tech applications. The copper-gold price ratio will rise if US-China trade conflict eases before the US election, but US rate cuts could curb copper’s gain.

Sign in / Sign up

Export Citation Format

Share Document