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This page has been updated with additional analysis since first publication. The flash composite PMI reading for March suggests that the economy continues to perform exceptionally well. While growth is likely to moderate over the coming quarters, India …
21st March 2024
We hosted an online briefing to discuss EM financial risks in more detail. Watch the recording here . Our risk indicators are presented as an interactive EM dashboard on our website here . The past few years have sharpened investors’ focus on assessing …
20th March 2024
Prime Minister Modi’s BJP appears on course to remain in power after India’s upcoming general election. But which party wins probably matters less for the economy and financial markets than whether the election delivers a stable government with a working …
19th March 2024
Global outperformance set to continue This week we published our Q2 India Economic Outlook . The key point is that while growth is likely to moderate over the coming quarters, India will remain a global outperformer. We are forecasting GDP growth of 7% in …
15th March 2024
Overview – India retained its title as the world’s fastest-growing major economy last year and we expect further strong growth over the coming years. That would put India on course to become the world’s third largest economy within the next couple of …
13th March 2024
This page has been updated with additional analysis since first publication. Slow grind back to 4% Headline consumer price inflation held steady at 5.1% y/y in February and looking ahead, we think it will take a few more months before it reaches the RBI’s …
12th March 2024
EMs will account for over half of global GDP within the next decade and almost 60% by 2050. Headlining this, India will become the world’s third-largest economy as soon as 2026. More generally, EMs with rapid population growth, the potential to develop …
11th March 2024
RBI is stepping in to prevent currency appreciation The Indian rupee has stood out so far this year as being one of only a small handful of EM currencies to have strengthened against the US dollar. (See Chart 1.) Chart 1: Currencies vs. US$ (% change, …
8th March 2024
HCES underscores need to update CPI index The initial findings of the Household Consumption Expenditure Survey (HCES) for 2022-23 (the full report will be released in June) show a shift in consumption patterns since the previous survey from over a decade …
1st March 2024
This page has been updated with additional analysis since first publication. Exceptional economic performance suggests no imminent rate cuts The GDP data for Q4 confirm that India’s economy ended last year with a bang. Looking ahead, we expect economic …
29th February 2024
Majority of MPC in no rush to pivot The minutes of the Reserve Bank’s February policy meeting released this week show the first signs of dissent as MPC member Jayanth Varma argued that a cut to the repo rate would be prudent to show that the committee is …
23rd February 2024
India’s economy performed exceptionally well last year and the latest data suggest that it has made a flying start to 2024 too. While inflation eased last month, we think it will be a slow grind back to the 4% midpoint of the RBI’s 2-6% target range. That …
22nd February 2024
This page has been updated with additional analysis since first publication. Manufacturing and services activity likely to remain robust The flash composite PMI reading for February suggests that the economy continues to perform exceptionally well. …
Farmer protests won’t lead to big fiscal giveaways Widescale farmer protests have returned and have dominated the headlines this week. Farmers are currently marching from neighbouring states towards New Delhi in demand of higher prices for key crops; …
16th February 2024
We expect India’s stocks, bonds, and currency to rally over the remainder of this year. It’s been a strong start to the year for India’s financial markets. The MSCI India Index of the country’s equities has been the strongest performer of MSCI’s large …
This page has been updated with additional analysis since first publication. In the context of its continued hawkish communications, we doubt that the drop in headline consumer price inflation in January will be enough to convince the RBI to pivot yet. …
12th February 2024
RBI not ready to pivot yet There were no surprises from the RBI’s policy announcement this week, with the repo rate being kept on hold at 6.50% once more. We had even suggested that MPC member Jayanth Varma would dissent, and in the event he was the only …
9th February 2024
The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone. With the economy holding up well and inflation likely to remain above the 4% target for a few more months yet, we doubt the central bank will loosen …
8th February 2024
RBI not ready to pivot yet The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone. With the economy holding up well and inflation to remain above the 4% target for a few more months yet, we doubt the central …
Remittances are often an underappreciated source of foreign currency for India. While growth in remittances will slow in the next few years, they should remain an important source of external funding for the economy and help to keep the current account …
7th February 2024
Finance Ministry focuses on consolidation Despite the looming general election, we had expected the Interim Budget for FY24/25 to be a muted affair. In the event, the Finance Ministry showed even more restraint than had generally been anticipated. The …
2nd February 2024
Elevated inflation and hawkish RBI rhetoric suggest rates to be left on hold next week Policy pivot only likely when headline inflation is closer to 4% Rate cuts will materialise in second half of 2024, much later than in many other EMs We agree with …
Finance Minister Nirmala Sitharaman appears to have successfully demonstrated a long-term commitment of reining in the fiscal deficit in the Interim Budget announcement for FY24/25. There is always a chance of fiscal slippage as the general election …
1st February 2024
This page has been updated with additional analysis since first publication. Manufacturing activity likely to remain robust The final manufacturing PMI reading for January suggests that activity got off to a strong start this year. Looking ahead, while …
Limited need for large fiscal giveaways As it is an election year, the Finance Ministry will deliver an “interim” Budget on Thursday 1 st February, in place of the annual Union Budget. Interim budgets give an update of the current fiscal year and outline …
26th January 2024
This is a special Global Economics Chart Pack that provides clients with key analysis to make sense of the macro and market impact of the disruptions to maritime shipping. The charts in this document come from our brand-new shipping dashboard , which …
25th January 2024
India is certain to become the world’s third-largest economy within the next decade, but the emergence of generative artificial intelligence (AI) will hamper rather than help its rise. This is in large part because of the detrimental impact it could have …
23rd January 2024
Russian oil imports drop as G7 cracks the whip We learnt this week that the goods trade deficit narrowed from US$20.6bn in November to US$19.8bn in December, the smallest monthly trade deficit since July. (See Chart 1.) Both imports and exports rose last …
19th January 2024
India’s economy has grown at a healthy clip over recent quarters and, with the help of government spending, we think it will continue to hold up well ahead of the upcoming general election. Given also that headline consumer price inflation is likely to …
17th January 2024
This page has been updated with additional analysis since first publication. Elevated headline inflation suggests no imminent rate cuts The rise in headline consumer price inflation to a four-month high in December supports our view that the central bank …
12th January 2024
Air pollution a modest headwind Air pollution in India has been a growing problem for several decades – on some measures air pollution has almost doubled from the levels at the start of the century. (See Chart 1.) Chart 1: India Annual Average PM 2.5 …
The sharp drop in net foreign direct investment (FDI) inflows into India over the past year was in part a consequence of the rise in global interest rates and the worsening global economic backdrop. But it was also due to a clampdown on the roundtripping …
9th January 2024
Given the thick smog covering parts of South Asia, forcing schools to shut down and disrupting activity, this Update takes a closer look into the economics of air pollution. Air pollution is mostly caused by the burning of fuels and biomass, vehicle …
8th January 2024
Remittance inflows to remain robust The World Bank reported in its latest Migration and Development Brief that India remained the world’s largest recipient of remittances in 2023. Remittances jumped to US$125bn (3.4% of GDP) last year, from US$111bn in …
5th January 2024
While equities in China might make up some lost ground over the next few months relative to those in India, we suspect they’ll underperform over the longer term. In the fifteen years or so that preceded the COVID-19 pandemic, equities in China and India …
4th January 2024
This page has been updated with additional analysis since first publication. Factory activity likely to hold up well in 2024 The manufacturing PMI survey for December suggests that activity lost some momentum at the end of 2023. That said, we think that …
3rd January 2024
Will the RBI follow the lead of other central banks? India’s economy has held up exceptionally well in 2023 due to strong government spending and investment. Meanwhile, timely data show a renewed surge in food prices. This is a worry for the RBI as the …
22nd December 2023
Market capitalisation closes in on US$4trn The latest leg up in the Sensex triggered by the announcement of the BJP’s thumping victories in three state elections has continued into this week, helped by a broader rally in global equities following the …
15th December 2023
India’s economy has grown at a healthy clip over recent quarters and, with the help of government spending, we think it will continue to hold up well ahead of next year’s general election. Given also that food inflation has picked up again, the RBI will …
13th December 2023
This page has been updated with additional analysis since first publication. Elevated food inflation suggests no chance of imminent loosening Headline consumer price inflation rose to a three-month high of 5.6% y/y in November amid a renewed rise in food …
12th December 2023
Sensex surges as BJP wins big in state elections The financial market reaction to the announcement of the BJP’s victory in three state elections is perhaps an indication that investors are confident that next year’s general election will deliver another …
8th December 2023
The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone. Against a backdrop of robust economic growth and a renewed rise in food inflation, we doubt the central bank will loosen policy until the second half of …
RBI in no rush to loosen policy The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone. Against a backdrop of robust economic growth and a renewed rise in food inflation, we doubt the central bank will loosen …
Overview – India’s economy has grown at a healthy clip over recent quarters and, with the help of government spending, we think it will continue to hold up well ahead of next year’s general election. Given also that food inflation has picked up again, the …
5th December 2023
The latest batch of state election results suggests that support for Prime Minister Modi’s BJP remains firmly intact and that it is clearly in the driving seat to secure another victory in next year’s general election. That reduces the risk of big fiscal …
4th December 2023
Revising up our GDP forecasts The activity data this week confirm that India’s economy is rude health. The GDP data for Q3 (Q2 of FY23/24) showed a slowdown in both y/y and q/q, but this was very mild and the bigger picture is that the pace of growth …
1st December 2023
This page has been updated with additional analysis since first publication. Manufacturing activity likely to end the year on a high note The manufacturing PMI survey for November suggests that activity continues to remain strong in Q4. The economy is on …
Economic strength and latest jump in food prices suggest no change in policy next week RBI will be reluctant to loosen too quickly given persistent food inflation threat We now think that rate cuts won’t materialise until second half of next year We …
30th November 2023
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
This page has been updated with additional analysis since first publication. India to remain an EM outperformer The RBI had stated that the GDP data for Q3 (Q2 of FY23/24) would “surprise everyone on the upside” and, even despite that spoiler, the data …
