Global Economic Scenario n India

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Global Economic Scenario & India:

Global Economic Scenario & India Dr. Abhijit Phadnis Talk at Maharashtra Seva Sangh , Mulund 9.12.2012

PowerPoint Presentation:

GDP By Countries: Purchasing Power Parity USD Billion

PowerPoint Presentation:

A mixed picture of growth .. But generally anemic! 7.4% 5.3% 2.9% 0.4% -0.1% -2.4% 1.5% 2.5% 0.9% 3.7%

PowerPoint Presentation:

Global Flashpoints: Economic & Geo-political

Developments: USA:

Developments: USA Money printing machine for last several years and artificially low interest rates Rising savings rate Growth still not fully in place Re-election of President Obama Fiscal Cliff Shale gas & shale oil in the US Rise of Mexico: potentially will become a substantial supplier to the US

Euro Area:

Euro Area G I I P S countries and now France Slipping into recession Austerities resulting in social problems High unemployment rates Would Euro survive?

Euro Area:

Euro Area

Euro Area:

Euro Area

Euro Area:

Euro Area

Euro Area:

Euro Area

Africa:

Africa The emerging continent Long history of strife, social unrests, dictatorships Everyone is looking towards Africa today for growth Some of the fastest growing countries are here in Africa

China:

China Smooth transition to new leadership Slowed down Focus shifting from investment led growth to consumption led growth Rise in wages four times over 10 years Housing bubble

Let’s have a look at the world of commodities & trade:

Let’s have a look at the world of commodities & trade

PowerPoint Presentation:

Crude Oil

PowerPoint Presentation:

Copper

PowerPoint Presentation:

Gold

PowerPoint Presentation:

A bearish view on trade, looking up!

Now, let’s turn to india:

Now, let’s turn to india

India: Key Numbers 2012-13:

India: Key Numbers 2012-13 India GDP: Est .: Rs. 1,00,00,000 Crore Fiscal Deficit: Est. : 5.5% of GDP Remittances from NRIs: Est.: Rs. 3,90,000 Cr. Trade Deficit: Est : USD 181 Billion Invisibles Surplus : Est : USD 114 Billion Current Account Deficit: Est : USD 67 Billion Capital Flows: Est : USD 73 Billion

Deteriorating Balance of Trade:

Deteriorating Balance of Trade Increase in oil bill and enormous import of Gold (though declining) is badly impacting the balance of trade!

Current Account Deficit:

Current Account Deficit

Slow down!:

Slow down! Uncertain political climate resulting in hesitation to invest is the main issue ..

Inflation:

Inflation Stubbornly high due to fallen Rupee, supply side constraints, higher purchasing power in Rural areas, (relatively) high Oil price!

Repo Rate:

Repo Rate RBI still hesitating to reduce repo rate due to discomfort with inflation!

:

Government Bond Yield When government borrowing cost goes up, it will for everyone else too!

Inflating away its debt!:

Inflating away its debt! Debt is going up, but the % is falling!

Rupee!:

Rupee! Rupee fell drastically on the back of current account deficit worries !

Stock Market:

Stock Market Euphoria in the market after the recent announcements..

The threat of downgrade!:

The threat of downgrade! Grade Rating Countries Prime Aaa US, UK, Germany High Aa China Upper Medium A Poland , Oman Lower Medium Baa India , Russia, Brazil, Spain Non-investment Ba Angola, Bangla Desh , Turkey , Portugal Highly Speculative B Argentina, Shri Lanka, Egypt Substantial Risk C Greece No Data African countries, Iraq, Iran Concerns: Rising fiscal deficit, political inaction for reforms, high trade/ current account deficit, slowing savings, sticky inflation & high borrowing costs, slowing growth further creating pressures on fiscal management

Let’s hope for the best:

Let’s hope for the best Softening of global commodities Reduction in Gold imports Targetted subsidy regime (?) Reigning of fiscal deficit & fiscal discipline GST, DTC Channeling of savings to financial instruments than real estate Turning of the interest rate cycle Real estate becomes affordable again