Market Talk – Tuesday, Jan. 26

ASIA:

The IMF expects the US and China to be by far the most successful at steering their economies through the pandemic, leaving Europe and other emerging markets trailing in their wake. In its updated forecasts for the global economy, the fund predicts that by 2022 recoveries in the US and China will leave their economies no more than 1.5 percent smaller than projected before the pandemic. IMF said other advanced economies will still be 2.5 percent short of their pre-pandemic path, while emerging economies excluding China will in 2022 be 8 percent smaller than expected in forecasts issued exactly a year ago.

The Reserve Bank of India has proposed tighter, bank-like regulation of the so-called shadow lending sector to prevent the turmoil caused by the collapse of an infrastructure financing firm in 2018. The country’s central bank has gradually moved towards tighter norms for the sector ever since one of its biggest firms, Infrastructure Leasing & Financial Services, collapsed in late 2018 amid fraud allegations. The RBI has proposed introducing a four-tiered structure for better regulation of NBFCs with about 25-30 of the nine thousand plus firms falling under the upper or second layer of the strictest regulations. The top layer will remain empty for now, RBI said.

India’s economy is projected to grow at 7.3 per cent in 2021, even as it is estimated to contract by 9.6 per cent in 2020 as lockdowns and other efforts to control the Covid-19 pandemic slashed domestic consumption, the UN has said. The World Economic Situation and Prospects 2021, produced by the United Nations Department of Economic and Social Affairs (UN DESA), said the global economy shrank by 4.3 per cent last year, over two-and-a-half times more than during the global financial crisis of 2009 and the modest recovery of 4.7 percent expected in 2021 would barely offset the losses of 2020. India’s economic growth is forecast to be 7.3 per cent in 2021, the fastest growing major economy with only China coming in a close second with a 7.2 percent projected growth rate in the calendar year 2021, the report said.

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