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India’s until it reaches a maximum of Additionally, India's weight in attracting approximately MIXED RECOVERY rebound to 0.3 per cent in WHILE HEADLINE Organization’s (FAO) Food CENTRAL BANKS inflation to decline slowly, and Similarly, the WTO projects a shipments, underscoring
worries that slowing overseas
Price Index has been slowly
recovery in world
the rate reductions are
Q1 2024 as against the
10 per cent by March 2025.
the MSCI Global Standard
US$2 billion in investments
inclusion in Consequently, India will share Index, which tracks emerging into India. US FDI inflows (US$ billion) 311 WITNESSED ACROSS contraction of 0.2 per cent in INFLATION IS EASING increasing over the past six NAVIGATE INFLATION projected to gather pace next merchandise trade volume economies will complicate
year. For 2024, the Fed eyes
DYNAMICS WITH
months following declines
policymakers' efforts to wind
with growth of 2.6 per cent in
the previous quarter. The UK
MAJOR ECONOMIES
UP, FOOD PRICES
equivalent weight with
stock markets, has reached
only one rate cut in the
Global Bond countries like China, Indonesia, another record high and is Furthermore, India’s China 163 economy continues to face CONTINUE TO POSE over much of 2023. The index DIVERSE STRATEGIES second half of the year. 2024 and 3.3 per cent in back on stimulus. Weak
exports are particularly
inched up to 120.8 in July
2025, following a significant
tepid household consumption,
inclusion in these global
anticipated to rise from the
and Mexico. India’s inclusion is
Indices likely to redistribute weights current 18.2 per cent to 19 bond indices would also France 42 Among the major economies, business investment, exports A SIGNIFICANT 2024 as compared to 117.7 in Easing of inflationary The cost-push inflation in decline of -1.2 per cent in worrisome for Japanese
CONCERN
2023.
policymakers who are banking
the beginning of the year in
contribute to lower 10-year
and imports.
per cent. This adjustment will
within the J.P. Morgan
pressures have prompted
Japan prompted its central
Emerging Market Bond Index, narrow the gap with China, bond yields due to the pace of growth is slower January. Indices for cereals, major central banks to initiate bank to increase rates for the Among key global economies, on external demand to help
India's inclusion of sovereign potentially reducing the shares whose weight is expected to participation of wider set of Germany 37 than the previous three years. Japan, which had been posting vegetable oils and dairy interest rate cuts, shifting second time in about 17 years exports from the UK, China, counter weak domestic
bonds in global indices such of Thailand, Poland, and the decrease slightly from 25.4 per investors in the global The US economy slowed to a robust growth in the With the inflation print falling products led to the price rise. their focus towards bolstering to 0.25 per cent in its July and the US have consumption.
as the J.P. Morgan Bond Index Czech Republic over the next cent to 25 per cent during the market. India 28 2.9 per cent in Q1 2024 as previous quarters, contracted faster than expected in most The food and beverage price their economic growth meeting. demonstrated notable Meanwhile, the European
starting June 2024 and 10 months. same period, potentially compared to 3.1 per cent in 0.2 per cent in Q1 2024. The regions, in the midst of index released by IMF, too, trajectory. improvements, contrasting Union's export sector has
Bloomberg Index from Indonesia 22 the previous quarter. The economy was squeezed by unwinding supply-side issues shows an uptrend. Meanwhile, central banks in with lacklustre performance faced challenges due to
January 2025 marks a 21 slowdown primarily reflected and restrictive monetary Among selected countries, Most central banks including some advanced countries, seen in the Eurozone and declining energy prices, and
significant milestone. It Japan slower growth in consumer weaker consumption and policy, the IMF expects global inflation in the US remained the US Fed have maintained a including the ECB, Canada, Japan. Both the latter further exacerbating
reflects heightened spending, exports as well as external demand, thereby inflation to decline steadily on the upper side of the pause in their interest rates in Switzerland Sweden and Bank economies are grappling with economic pressures.
confidence and interest 2023 2022 throwing a fresh challenge to from 6.8 per cent in 2023 to target band, averaging 3.2 per recent meetings to allow the of England have begun to ease subdued demand. Exports
among foreign investors in FDI outflows (US$ billion) state and local government the policymakers. 5.9 per cent in 2024 and 4.5 cent in the second quarter of impact of hikes done so far to their rate cycles, leading to an from Japan were dragged
India's growth trajectory. The US 404 spending. The employment per cent in 2025. The Fund the current year. work through the system. improvement in the global down by China-bound chip
move is expected to lower rate in the US also rose to a On the other hand, the expects the advanced demand and growth outlook.
the cost of capital by Japan 184 high of 4.3 per cent in July, the Chinese economy advanced economies to return to their Moreover, the US Fed
attracting additional highest since October 2021. 5.3 per cent in Q1 2024, inflation targets sooner than indicated that it expects
investment, thereby China 148 Meanwhile, the labour force marking the steepest the emerging market and THE UN FOOD AND
supporting the country's participation rate edged expansion since Q2 2023, developing economies. Core AGRICULTURE
financing requirements and Germany 101 higher to 62.7 per cent in July lifted by continued support inflation, on the other hand, is ORGANIZATION’S Policy Rates of Major Central Banks (%)
boosting private sector from 62.6 per cent in June. measures from Beijing and projected to decline more (FAO) FOOD PRICE 6.0 5.50 4.0
investments. France 72 spending related to the Lunar gradually. INDEX HAS BEEN 5.0 5.25
Eurozone, which was largely New Year festival. In the first 4.0 4.42
3.0
On 28th June 2024, India Saudi Arabia 16 affected by the global turmoil, Despite the softening of SLOWLY INCREASING 2.0 3.5
officially joined J.P. Morgan's showed some resilience by three months of the year, inflationary pressures, global OVER THE PAST SIX 1.0 3.45
Government Bond Index – India 13 China’s fixed investment also food prices remain elevated MONTHS 0.0 0.10
Emerging Markets, initially rising to 0.4 per cent in Q1 grew by 4.5 per cent, the owing to geopolitical conflicts, FOLLOWING -1.0 3.0
with a one per cent weight. 2023 2022 2024. UK’s growth marked a most in nearly a year. extreme weather conditions, DECLINES OVER Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024
This weight is set to increase Source: UNCTAD World Investment report 2024 high input costs and increased
gradually, rising by one demand the world over. The MUCH OF 2023 US Eurozone UK Japan China (rhs)
percentage point monthly
In terms of outflows, FDI Conversely, outward UN Food and Agriculture Source: National Sources
flows from the developed investment from European
nations increased by 4 per countries fell by 11 per cent, Trajectory of Real GDP growth (y-o-y%) Global Inflation Trends (y-o-y%)
Global billion, while flows to economies, US, India and UK Notably, investments are cent to US$1.1 trillion in with notable decreases 5.3 10.0 WORLD TRADE geopolitical tensions.
observed in Germany, Sweden
2023. The United States and
developed economies fell by
increasing in sectors like
also appear in the top five
Investment 15 per cent. destinations for both automotive and electronics, Japan emerged as the leading and Spain, which are major 8.0 EXPECTED TO While global economic
sources of outward
sources of outward
growth has slowed and
REBOUND
6.0
greenfield projects as well as
particularly in regions with
Flows FDI inflows declined for most international project finance access to major markets. investment, with both investment. 2.9 4.0 3.2 2.5 2.7 external demand weakened
Further, FDI outflows from
countries seeing significant
initially, signs of a trade
reporting economies. About
deals.
However, many developing
two thirds of developed countries continue to face increases. Outward FDI from developing countries slowed 2.0 2.1 0.3 In recent years, global trade recovery are becoming
by 11 per cent to US$491
US increased by 10 per cent
Global foreign direct economies saw declines and Looking ahead to 2024, while difficulties in attracting foreign and by 14 per cent from billion in 2023. This decline 0.4 0.3 0.0 has faced a convergence of evident. According to the IMF,
investment (FDI) fell by 2.0 about half of the developing challenges persist, there is investment and integrating Japan, going against the overall was widespread across most -2.0 challenges known collectively world trade growth is
per cent to US$1.3 trillion in ones. US continued to remain potential for modest growth into global production trend for developed regions, although South-East US Eurozone UK Japan -0.2 China Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 as the "poly-crisis". This forecasted
2023, influenced by economic the largest FDI recipient, driven by improved financial networks, underscoring countries. Asia experienced a continued Q12023 Q22023 Q32023 Q42023 Q12024 US UK Eurozone Japan China includes disruptions from the 0.3 per cent in 2023 to 3.0
slowdowns and geopolitical accounting for almost a conditions and efforts to ongoing disparities in global growth in outward COVID-19 pandemic, supply per cent in 2024, further
tensions. Inflows into quarter of global flows. China facilitate investment through economic participation. investment. Source: National Sources Source: National Sources chain interruptions, and accelerating to 3.3 per cent in
developing countries, accounted for another ~12 national policies and heightened trade policy 2025.
previously robust, declined by per cent. Among the top international agreements. uncertainties driven by
7.0 per cent to US$867
28 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 29
QUARTERLY JOURNAL OF ECONOMICS
QUARTERLY JOURNAL OF ECONOMICS
AUGUST 2024 AUGUST 2024