Do it yourself

India’s growth 2QFY26 surprised positively with 8.2% real GDP growth print, up from 5.6% a year ago. On the face of it, this is an impressive print—broad-based, investment-driven, and supported by a healthy services backbone, and steady private consumption; though, a few familiar questions on data quality, especially after the IMF’s recent downgrade of India’s statistical credibility to Category C , cast some cloud on sustainability.   A broad-based GDP beat As per the official release real GDP for Q2FY26 is estimated at ₹ 48.63 lakh crore, growing 8.2% YoY, while nominal GDP rose 8.7%. Growth drivers ·          Manufacturing (9.1%) and Construction (7.2%) carried the secondary sector, delivering an aggregate 8.1% GVA growth . ·          Tertiary sector GVA expanded 9.2%, led by: Financial, real estate & professional services: 10.2% Public administration & defence: 9.7% ...

The International Monetary Fund (IMF) and the World Bank designed the Debt Sustainability Framework (DSF), to assess and manage the debt sustainability of low-income countries (LICs). DSF is a key tool in the overall global financial architecture. It analyzes a country's indebtedness and its vulnerability to shocks through regular analysis of a country's present and projected (over the next 10 years) debt burden. The analysis involves conventional solvency analysis (Debt to GDP, Debt to Export, Debt service ratio, fiscal balance, etc.) and stress testing for potential crisis situations. The idea is to detect potential debt crises early and implement appropriate preventive actions. DSF, inter alia, guides— (i)      borrowing decisions of LICs by assessing their financing needs and repaying abilities; (ii)     LICs how to maintain a balance between their development goals and financial stability; (iii)    the process of identifying countries un...

Early this year BRICS, a bloc of leading emerging economies, announced the induction of five new members, viz., Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, to its fold. The ten-member bloc has a significant presence in global trade. More specifically, it exercises significant control over the global energy markets, controlling 42% of global oil production and 35% of total oil consumption. In July 2023, the then President of BRICS, South Africa claimed that over 50 emerging nations have expressed their desire to join the group. Recently, Russia’s Federation Council Committee on International Affairs, stated that BRICS would be expanded further as more than 40 countries are desirous of joining the group. The cooperation between BRICS members is free, and flexible and extends to a variety of subjects of common interest amongst members. The members and other countries desirous of joining the group, view BRICS as an alternative to global bodies viewed as dominated...

Wishing all the readers, family, and friends a very Happy Diwali. May the Lord enlighten all of us and relieve everyone from pain and misery.   ========================================================================== The growth is slowing across the world. The engines of global growth - India and China – are also expected to slow down in 2024. Most European countries are flirting with recession. Canada is technically in recession. The US growth is stronger than estimates but not enough to support the Growth decelerating As per the latest  World Economic Outlook  report released by the World Bank, global growth has slowed down to 3% in 2023 from 3.5% recorded in the year 2022. The global economic growth is expected to further decelerate to 2.9% in 2024. The advanced economies have grown by 1.5% in 2023 against 2.6% in 2022. Their growth is likely to further decelerate to 1.4% in 2024. Economic growth in Emerging economies is also not accelerating. These economies are exp...

The Reserve Bank of India constituted an Inter Departmental Group (IDG) in December 2021 “To examine issues related to Internationalisation of INR and suggest a way forward”. The Group submitted its   recommendations   in October 2022; and the same have been made public last week. The following are some of the highlights of the IDG recommendations. Terms of References The terms of reference of the IDG were as follows - ·           To review the extant framework for use of INR for current and capital account transactions and assess their current levels; ·           To review the extant position of use of INR for transactions between non-residents and the role of off-shore markets in this regard; ·           To propose measures, consistent with the desirable degree of capital account liberalization, to generate incentives for use of INR for trade...

The past few months have been quite trying for investors and traders in the financial and commodity markets. The markets have been jittery, and indecisive. Obviously, the market participants are becoming somber in their market outlook for the short term. The global order is perhaps undergoing a major reset and the picture of emerging global order is incomplete. Consequently, the present global economic, geopolitical and financial conditions are quite uncertain and challenging. As per the conventional wisdom, at this time the investors should be busy assessing the likely contours of the emerging global order, forecasting the investment opportunities and positioning themselves as per their assessments; whereas the traders should be deciphering the opportunities arising due to the transition. The shifting investors’ positioning may create opportunities for the traders in the markets. I noted the following key trends in the markets to assess how the investors’ positioning is shifting...

 In the aftermath of devastation that took place due to the second world war (WWII), some key global institutions were created and multilateral agreements signed to (i) avert chances of another major war; (ii) enhance global cooperation for accelerated reconstruction work; and (iii) promotion of globalization of trade and commerce to ensure equitable growth and development. Bretton Wood agreement signed in 1944 was one of such efforts. The Bretton Woods agreement established the U.S. dollar as the reserve currency for world. The idea was to prevent competitive devaluations of currencies, avert trade wars and promote international economic cooperation for growth & development. The Bretton Wood signatories agreed to maintain fixed exchange rates between their respective currencies and the US Dollar. The US dollar in turn was pegged to the price of the gold. Until WWI, most countries followed the gold standard for their respective currencies; which essentially meant that they ...

A decade ago, the global economy slipped into a deep abyss, contracting by more than 2.5% in 2009, as compared with a over 4% growth recorded during 2004-2007 period and a still positive growth of over 2% recorded in 2008. The extent of the slowdown could be gauged from the fact that over 100 countries (including 33 developed countries) all across the world recorded contraction in GDP during 2009. The global financial markets had frozen; large banks were collapsing; some European and Latin American countries were on the verge of defaulting on their sovereign obligations and needed to bailed out by IMF. Amongst all this chaos a group of four developing countries Brazil, Russia, India and China (BRIC) emerged as the savior. These countries recorded sharp growth recovery in 2010 and saved the global economy from slithering into a deeper recession, which many feared could have been much worse than the great depression of 1930s. A decade later, all four BRIC countries...