Independence Day 2023: Five key global and domestic macro developments over past year
Key macro developments since last Independence Day: India is now the fifth largest economy, US evades recession, war against inflation continues, Indian rupee weakens, crude oil prices ease.
The world and India have seen many remarkable macro developments since the last Independence Day. There have been many other significant macro developments since the last Independence Day, including inflation cooling off, India's tax revenue rising, steady corporate earnings of India Inc., normal monsoon in India, and the Russia-Ukraine war continued.
Let's take a look at five key macro developments since the last Independence Day:
1. India is the fifth largest economy: India is now the fifth largest economy in the world behind the US, China, Japan and Germany. As per the World Economic Outlook (WEO) database of the IMF, India’s gross domestic product (GDP) in 2022 was $3.39 trillion. By 2027, the Indian GDP is expected to touch $5.15 trillion.
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2. US evades a recession: The US evaded a looming recession even though the Fed continued hiking rates. Since the Fed started raising interest rates last year, worries about a coming recession in the US mounted. Experts now believe the possibility of a US recession is beginning to recede.
However, the risk of the US facing a recession is still not ruled out. As per a Bloomberg report, "Economists are predicting the US will escape a recession, though it’ll be well into 2024 before anyone can be sure of it."
3. The war against inflation continues: Central banks worldwide have been vigilant in their efforts to combat inflation. Although inflationary pressures might be showing signs of easing, the battle against rising prices continues.
In July, the US Federal Reserve decided to increase interest rates following a brief pause in June. Conversely, the Reserve Bank of India (RBI) has chosen to keep rates unchanged over the course of the last three consecutive policy meetings. However, a recent upturn in inflation figures for July has ignited concerns that the RBI might opt to take decisive action and raise interest rates during its forthcoming meeting in October.
4. Indian rupee now above 83 mark: On August 14, the Indian currency closed at 83.18 per dollar. On August 12 last year, the rupee was at 79.64 per dollar. This means the Indian currency has depreciated by over 4 per cent in the last one year against the US dollar.
Most of this weakness could be attributed to the relentless rise of the US dollar against its global peers amid sustained rate hikes by the US Fed.
5. Crude oil prices eased: Crude oil prices have seen a decline since the last Independence Day due to concerns over global economic slowdown which could hit the demand for crude oil as fuel. Crude benchmark Brent Crude was at $98.15 per barrel on August 12 last year. On August 11 this year, Brent Crude closed at 86.81 per barrel.
World's two biggest economies, the US and China have been on a shaky pitch since last year. Both countries are also the largest oil consumers in the world. An economic slowdown in these two countries is bad news for crude oil prices.
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Business NewsEconomyIndependence Day 2023: Five key global and domestic macro developments over past year
First Published:15 Aug 2023, 06:58 AM IST
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