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