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India Sees Fiscal Scope for Retaining World-Beating Economy Tag – BNN

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(Bloomberg) — India has the fiscal space to do more to support the economy, poised to wrest the title of the world’s fastest-growing major one from China and keep it for at least another two years, according to a government document.

Gross domestic product is expected to grow by 8%-8.5% in the year starting April after likely expanding 9.2% in the current year, according to the Economic Survey — an annual report card on the economy — presented in Parliament by Finance Minister Nirmala Sitharaman Monday. The International Monetary Fund predicts it will keep the momentum in the following year as well.

Growth will be supported by “widespread vaccine coverage, gains from supply-side reforms and easing of regulations, robust export growth, and availability of fiscal space to ramp up capital spending,” the survey said. 

The survey expectations for the next fiscal year are conservative compared to the 9% expansion seen by IMF. The government document was unveiled a day ahead of Sitharaman presenting the nation’s federal budget for the next fiscal year when she’s expected to announce plans to boost spending to revive investment and create jobs.

“The projection is based on the assumption that there will be no further debilitating pandemic related economic disruption, monsoon will be normal, withdrawal of global liquidity by major central banks will be orderly,” according to the survey. It also depends on oil price being in the range of $70-$75 a barrel and global supply chain disruptions easing.

Prime Minister Narendra Modi’s administration is under pressure to support growth as the central bank, which has thus far done much of the heavy-lifting to support the economy, begins dialing back some of its pandemic-era stimulus.

©2022 Bloomberg L.P.

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Argentines Seek Hedging in Crypto After Economy Minister Resigns – BNN

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(Bloomberg) — The cost of buying Tether with Argentine pesos surged Saturday after Economy Minister Martin Guzman resigned. 

The resignation marked the biggest departure of President Alberto Fernandez’s government after infighting escalated within the ruling coalition. No replacement was immediately named.  

The price of Tether measured in Argentine pesos jumped on major exchanges soon after the minister announced his resignation on Twitter, according to the CryptoYa website, which reports minute-by-minute prices. The coin fetched 257 Argentine pesos on the Binance exchange, up 6.6%. On the Lemon Cash exchange, prices jumped 11% to 279 pesos. 

Crypto is the only market trading in Argentina on Saturday. While volumes are small, the moves could indicate unease, at least among some traders, over the growing rift within the ruling coalition and concern over the government’s ability to tackle rising inflation and other economic challenges.   

Argentina is one of the nine countries with the highest adoption of cryptocurrencies, according to Chainalysis, a site specializing in crypto and blockchain. In a country with recurring currency crises and inflation running around 60% annually, two-thirds of Argentines who invest in crypto say they do so to protect their savings, according to a study by Buenos Aires-based Wunderman Thompson.

©2022 Bloomberg L.P.

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Charting the Global Economy: Factories Slow Down From US to Asia – BNN

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(Bloomberg) — Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

Manufacturing from the US to Asia is very much in a slowdown as factories continue to struggle with supply snarls, labor shortages and elevated materials costs.

A measure of US manufacturing activity weakened in June to a two-year low, and several regional Federal Reserve surveys indicated business activity shrank. Factory purchasing managers’ gauges across Asia eased, with South Korea, Thailand and India among those showing the biggest declines, according to S&P Global.

Similar indexes in Poland, Spain and Italy also showed weaker activity compared to May.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

US

Consumer spending fell in May for the first time this year and prior months were revised lower, suggesting an economy on somewhat weaker footing than previously thought amid rapid inflation and Fed interest-rate hikes.

Regional Fed manufacturing surveys have taken on a grimmer tone, with four of five indicating business activity shrank in June. Separately, a measure of overall manufacturing slid to a two-year low as new orders contracted, restrained by lingering supply constraints and some softening in demand.

The pandemic housing boom is careening to a halt as the fastest-rising mortgage rates in at least half a century upend affordability for homebuyers, catching many sellers wrong-footed with prices that are too high.

Europe

Confidence in the euro-area economy slipped as households become more pessimistic amid fears a Russian energy cutoff will spark a recession. At the same time, they’re less worried about inflation than they were a month ago, though there’s a split between core and peripheral euro-area countries.

After suffering from unprecedented shocks in recent years, the UK is succumbing to more intractable problems marked by plodding growth, surging inflation and a series of damaging strikes.

Asia

China’s economy showed some improvement in June as Covid restrictions were gradually eased, although the recovery remains muted. That’s the outlook based on Bloomberg’s aggregate index of eight early indicators for this month. The overall gauge returned to the neutral level after deteriorating for two straight months.

Japan’s factory output shrank at the fastest pace since the height of the pandemic as the lagged impact of China’s virus lockdowns continued to disrupt supply chains and economic activity in the region. The weakness in manufacturing extended across Asia, particularly in South Korea, Thailand, India and Taiwan.

Emerging Markets

Colombia’s central bank delivered its biggest interest rate increase in over two decades. Policy makers are bracing for another spike in annual inflation that’s already above 9%. 

Two years after Argentina emerged from its latest default, a debt crisis in brewing once again. This time, the immediate trouble is in the local bond market, where creditors have become reluctant to roll over maturing government bonds.

Zambia’s inflation rate dropped below 10% for the first time in almost three years in June, bucking a global trend of record consumer-price growth. Optimism over the nation’s economy since the election of Hakainde Hichilema as president in August, a potential debt restructuring and a $1.4 billion bailout package from the International Monetary Fund has seen a rally in the local currency, which has helped contain prices.

World

Differences in underlying inflation trends call for different policy outlooks among the world’s top central banks, according to Bloomberg Economics. The Fed will have to go well into restrictive territory, the Bank of England may go a little above neutral and the European Central Bank might not even get that far.

©2022 Bloomberg L.P.

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Quarterly Investment Guide 3Q 2022: US economy on shaky ground – CNBC

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