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All the signs suggest that a second Trump administration would take a more protectionist approach to trade. Export demand in Mexico, East Asia and ASEAN would be particularly hard hit by a universal US import tariff or a dollar devaluation, and those …
29th April 2024
Positivity surrounding India’s near and long-term economic outlook is arguably at its highest in a decade, with good reason. But amid the optimism, it is easy to become complacent to the downside risks. This Focus highlights five key risks that we think …
3rd April 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
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
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
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
16th November 2023
The government’s ambition of developing a globally-competitive manufacturing sector, combined with relatively slow progress on shifting away from using coal for electricity production, means India will become the world’s biggest polluter in the …
23rd August 2023
India’s economy is one of the most vulnerable in the world to the physical effects of climate change. Climate change alone won’t stop relatively rapid rates of growth over the coming decades. But it is likely to mean that income convergence with other, …
31st May 2023
If it isn't already, India will soon be the world’s most populous nation. But this doesn’t mean that policymakers can simply wait for the economic benefits to arrive. The key to unlocking India’s demographic potential is to develop the manufacturing …
15th February 2023
The Indian rupee has continued its long-run trend of depreciation against the US dollar this year, taking it to a record low of 80/$. It may still weaken further in the near term. However, there are reasons to think that that the rupee will reverse …
31st August 2022
Policy tightening by the RBI is putting public finances stretched by the pandemic under further strain. While an increase in debt financing costs is inevitable, we expect the government and RBI to step up financial repression so that the full impact of …
1st June 2022
The pandemic’s most significant economic legacy in India will be a heavily-damaged banking sector that is likely to constrain investment over the years ahead. This underpins our view that the economy could be 5% smaller over the long run than it would …
17th November 2021
The Indian government’s aim to significantly ramp up infrastructure investment through its flagship National Infrastructure Pipeline (NIP) has suffered less disruption than might have been expected during the pandemic. That is a positive for long-term …
20th September 2021
India’s ferocious second wave of COVID infections is likely to have caused the economy to contract by about 5% over Q2 as a whole. The good news is that the outbreak is quickly subsiding and activity appears to have bottomed out. But the recovery is …
3rd June 2021
The upcoming state elections in India will have an important bearing on economic policy at the local level. But perhaps more significant, the outcome of the state elections could be important in determining whether Prime Minister Modi’s BJP will be able …
10th March 2021
The Finance Ministry faces a tough balancing act in the Union Budget for FY21/22 as it aims to stabilise the public finances while avoiding economically and politically-damaging spending cuts. The most likely outcome is that it will set ambitious revenue …
25th January 2021
The distribution of an effective COVID-19 vaccine in India will brighten the economic outlook next year, but India’s recovery will still be one of the weakest among major economies. One consequence is that government bond yields will remain exceptionally …
16th December 2020
The economic slump and the government’s fiscal response are driving a sharp rise in public debt in India. There is no immediate threat given low-interest rates and the likelihood that nominal GDP growth will rebound from next year. But in coming years …
13th August 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
29th June 2020
India’s economy is all but certain to contract this year for the first time since 1979. And the government’s reluctance to respond to the coronavirus crisis as aggressively as those elsewhere means that the recovery will be slow too, as household and …
6th May 2020
A wave of anti-government protests and a weak economy have increased the likelihood of the finance ministry delivering additional fiscal stimulus in the FY20/21 union budget on Saturday 1 st February. That would provide a small boost to growth over the …
22nd January 2020
After a dreadful 2019, a combination of policy loosening and more decisive measures to deal with problems in the shadow banking sector will push economic growth in India back up to a healthier pace in 2020. And with core inflation set to rise, we think …
17th December 2019
Three years after the shock announcement that the bulk of India’s bank notes were being withdrawn, any benefits from “demonetisation” should be evident by now. But the promised gains haven’t materialised and the inadvertent economic positives that have …
30th October 2019
Upcoming state elections could help determine the pace of economic reform in India over the coming years. A win for the BJP in Haryana could provide reassurance for state assemblies elsewhere that contentious reforms need not be electorally unpopular. …
15th October 2019
Since securing re-election this year, the Modi government has made it a formal aim to almost double the size of India’s economy to US$5trn by March 2025. In our view, the government is likely to fall short of this lofty ambition. Even so, we think that …
17th September 2019
Only one-quarter of Indian women of working age are in paid employment. If participation in the workforce could increase to the rates of other Asian countries such as Indonesia or the Philippines by 2025, the economy could be 15% larger than otherwise. …
7th August 2018
Talk of India’s potential to become the “next China” is inevitable given their enormous populations, and will intensify as China’s economy slows. Those hoping that India can match China’s former rates of economic growth are likely to be disappointed. …
7th March 2018
The recapitalisation package recently announced by the government is the most significant measure yet to tidy up India’s beleaguered banking system and should all but enable India’s banks to meet global capital requirements over the coming years. Further …
11th December 2017
India is often heralded for demonstrating a new path to middle income by focusing on the development of its services sector rather than on significant industrialisation. It is true that India’s services sector has grown more rapidly than in most other …
28th November 2016
The UN’s projection that India will become the world’s most populous nation as soon as 2022 has refocused attention on the country’s remarkable demographic potential and the impact this could have on its economic development. The key challenge for India’s …
27th August 2015
