India's real GDP growth is projected to have slowed significantly to 6.4% in FY25 from 8.2% in FY24, as per the first advance estimates by the National Statistics Office (NSO). Meanwhile, nominal GDP growth remained stable at 9.7% in FY25, compared to 9.6% in the previous year. This growth is lower than the 10.5% assumed by the government for the Budget estimates in July. However, the government remains optimistic about meeting the fiscal deficit target of 4.9% of GDP, thanks to strong revenue collections and subdued capital expenditure, which provide room for savings. The sharp slowdown in real GDP growth may be overstated, as the gross value added (GVA) metric, which measures value addition from the supply side, is considered more reliable than the GDP metric based on demand-side output. Both GDP and GVA growth are estimated at 6.4% for FY25. However, this contrasts with FY24, where GDP growth outpaced GVA growth by a full percentage point, with the latter recorded at 7.2%. Nonetheless, the estimated 6.4% growth for FY25 falls below India’s trend or potential growth rate. Historically, real growth averaged 6.4% for GVA and 6.7% for GDP between FY16 and FY20, before the Covid-19 pandemic. Since then, India has developed new growth drivers, such as robust services exports, improved banking and corporate health, and adaptation to reforms like GST implementation. On the downside, government debt and household leverage have risen. While household debt levels remain manageable, the rapid accumulation, coupled with slow real wage growth, may be dampening urban demand. Considering these factors, India's potential growth is estimated to range between 6.5% and 7%, aligning with the pre-Covid trend. The second half of FY25 (H2) is expected to perform better, with GVA and GDP growth projected at 6.6% and 6.7%, respectively, compared to the weaker 5.6% and 5.4% growth recorded in the July-September quarter. This recovery aligns more closely with trend growth. However, the NSO's full-year estimates rely on data from the first eight months of FY25 and significant extrapolations, leaving room for adjustments, as seen in previous years. Despite this, the current estimates appear realistic. Key growth drivers in H2 include stronger performance in the agriculture sector, with GVA growth accelerating to 4.5% from 2.7% in H1, and higher government spending. On the demand side, private final consumption expenditure (PFCE) is expected to grow by 7.3% in FY25, compared to 4% in FY24, marking a positive shift. Additionally, the labor-intensive construction sector continues to grow robustly at 8.6%, surpassing pre-Covid growth rates. Overall, while H1 FY25 was weighed down by one-off factors, the economy shows signs of better performance in H2, even though it remains below its potential. Disclaimer: This image is taken from Shutterstock

China's factory activity grew in December, albeit at a slower-than-expected pace, as falling export orders and trade uncertainties weighed on overall sales, according to a private-sector survey released Thursday. The Caixin/S&P Global manufacturing PMI declined to 50.5 in December from November’s 51.5, missing analysts' expectations of 51.7. While the index remained above the 50-point threshold that separates growth from contraction, the slower expansion underscored challenges for the manufacturing sector. The report highlighted a three-month low in the rate of output expansion, driven by a slowdown in new orders. Notably, export orders contracted for the fourth time in five months, reflecting subdued global economic conditions and fears of new U.S. tariffs. These developments pose significant risks to China’s position as the world’s leading exporter. Some exporters had accelerated shipments in anticipation of U.S. tariff hikes in 2025, but this temporary boost now appears to be fading, as noted in a report by China Beige Book. Policy measures introduced by Beijing in late 2024 to stabilize the economy have yielded mixed results. While some sectors have shown signs of recovery, the broader manufacturing industry remains under pressure. Policymakers are prioritizing domestic demand revival, with plans to increase household incomes and promote consumption through measures such as expanded trade-in schemes for consumer goods and higher pensions. Despite these challenges, Chinese manufacturers retained a cautiously optimistic outlook for 2025. However, the degree of optimism has diminished to its lowest level since September, reflecting concerns over growth and trade prospects. External threats, including U.S. tariff risks, continue to temper expectations of significant sales growth driven by new products or policies. Labor market conditions also weakened, with staffing levels declining for a fourth consecutive month, though the rate of job cuts was slower than in November. Additionally, manufacturers reduced selling prices for the first time since September, even as input costs rose. Companies cited efforts to support sales by absorbing higher costs and lowering prices, including export charges. Wang Zhe, an economist at Caixin Insight Group, emphasized the need for proactive and flexible policy measures to address the increasingly complex external environment. He called for initiatives to improve household incomes and livelihoods, underscoring the importance of robust domestic consumption as a counterbalance to external economic pressures. Disclaimer:This image is taken from Reuters.

ICICI Bank has forecast that India's Current Account Deficit (CAD) will remain at 1.1% of GDP in FY25, primarily due to a widening trade deficit and foreign portfolio investment (FPI) outflows. According to the bank’s recent report, significant changes in the country's external position have been noted in recent months, with key contributors being a rise in the trade deficit and persistent outflows from foreign investments. In November 2024, India’s trade deficit reached a record high of $37.8 billion, a sharp increase largely attributed to gold imports, which amounted to $14.9 billion. Additionally, non-oil and non-gold imports have been rising steadily, reflecting a 3.5% year-on-year increase in October-November 2024. On the export front, while oil exports saw a significant drop of 36% during the same period, non-oil exports showed promising growth. Electronics exports surged by 50%, and engineering goods saw a 27% increase, offering some optimism amidst the trade challenges. Despite the government’s efforts to control gold imports, the trade deficit is expected to remain under pressure due to global economic conditions. The weaker global growth outlook, coupled with rising interest rates, particularly from the United States Federal Reserve, is a key factor contributing to the overall trade imbalance. The ICICI Bank report emphasized that the trade deficit could worsen in the coming months, particularly given the uncertain global economic environment. The report also highlighted the contrast between Foreign Direct Investment (FDI) inflows and Foreign Portfolio Investment (FPI) outflows. While FDI has remained strong, particularly in sectors like technology and infrastructure, FPI outflows, driven by exits in India’s primary equity markets, have somewhat offset the gains from FDI. This shift has resulted in a more precarious Balance of Payments (BoP) situation for the country. The first half of FY25 saw a BoP surplus of $23.8 billion, but the second half is now witnessing a sharp decline. The overall BoP surplus is expected to remain neutral for the year, with risks of turning negative if FPI outflows continue to exceed expectations. ICICI Bank’s forecast underscores the challenges India faces in maintaining a balanced external account amidst global uncertainties and domestic trade pressures. Disclaimer:This image is taken from Bloomberg.

Core inflation in Tokyo, Japan’s capital, accelerated in December, providing momentum to expectations for a potential near-term interest rate hike by the Bank of Japan (BOJ). According to data released on Friday, the Tokyo core consumer price index (CPI), excluding volatile fresh food costs, rose by 2.4% in December compared to the previous year. While this fell slightly below the market’s median forecast of a 2.5% increase, it marked an uptick from November’s 2.2% rise. Meanwhile, a secondary measure that excludes both fresh food and fuel costs, considered a better reflection of demand-driven inflation, showed a 1.8% annual increase, down slightly from 1.9% in November. Service-sector inflation also maintained a steady climb, with prices rising by 1.0% in December following a 0.9% increase in November. Analysts view this as an indication of firms passing higher wage costs onto service prices, a development aligned with the BOJ’s aim to achieve sustainable wage-driven inflation. “There’s a chance higher wages will be passed onto services prices, which is positive for the BOJ in normalizing policy,” commented Masato Koike, a senior economist at Sompo Institute Plus. Despite the acceleration in inflation, signs of economic fragility remain evident. Separate data revealed that Japan’s factory output fell by 2.3% in November, marking the first decline in three months. This drop, attributed to reduced production of semiconductor equipment and automobiles, underscores the challenges posed by weakening global demand for exports. The data cast doubt on the resilience of Japan’s economic recovery, raising questions about the sustainability of the inflation trend. Energy and food prices, particularly utility bills and staples like rice, played a significant role in driving Tokyo’s inflation. However, some experts warn that these price pressures could burden consumers and dampen overall demand, potentially discouraging businesses from implementing further price hikes. “When stripping away the effect of rising utility bills, there’s no sign of strength in inflation,” noted Toru Suehiro, chief economist at Daiwa Securities. Suehiro suggested that the BOJ might delay any interest rate adjustments until clearer signs of economic and price stability emerge. The BOJ has maintained steady interest rates since raising its short-term policy rate to 0.25% in July, following the end of its negative interest rate policy in March. While there has been widespread speculation about another rate hike, Governor Kazuo Ueda has emphasized the need to assess additional data on wage trends and the potential impact of U.S. fiscal policies before making further decisions. A Reuters poll earlier this month indicated that most analysts expect the BOJ to raise rates to 0.5% by March 2024. As policymakers prepare for the next BOJ meeting on January 23-24, Tokyo’s inflation data will be a key factor in their deliberations. The meeting will likely weigh the progress made towards the 2% inflation target against the backdrop of Japan’s export-dependent economy and the evolving global economic landscape. Whether the BOJ opts for a rate hike in January or waits for its subsequent review in March remains a focal point for market watchers. Disclaimer:This image is taken from Reuters.

In one of our standout episodes of the season, Chong Yue-En, a lawyer and the managing director of Bethel Chambers LLC, unpacks the intricate issue of financial abuse. What warning signs should you look out for, and what legal or non-legal steps can be taken to address and reduce its effects? Disclaimer: This podcast is taken from CNA.

When it comes to setting financial goals, the usual recommendation is to cut back on spending and increase savings. But is it really that straightforward? In this segment, Dawn Cher, the writer behind the personal finance blog SG Budget Babe, joins Andrea Heng to discuss strategies for diversifying income sources, overcoming the hesitation to begin investing, and evaluating financial portfolios effectively. Disclaimer:This podcast is taken from CNA.

Global financial markets were thrown into turmoil recently as Japan's main stock index experienced its steepest drop in 37 years, and Wall Street stocks saw their sharpest decline in almost two years. Eddy Loh, Chief Investment Officer of Maybank Group Wealth Management, discusses with Andrea Heng the implications of these events for economies and investors. Disclaimer: This Podcast is taken from CNA.

Food security remains a pressing concern in Singapore, given its dependence on imports for over 90% of its food supply. The national objective of achieving a 30% local food production target by 2030, known as the 30 by 30 goal, aims to address this issue. However, the local farming sector continues to face challenges in establishing a sustainable ecosystem. Steven Chia and Crispina Robert engage in discussions with Kenny Eng, a fourth-generation farmer and founder of The Local Farm, alongside Professor William Chen, director of the NTU Food Science and Technology Programme, to explore factors such as cost, consumer behavior, and overall commitment influencing the viability of local farming. <i>Disclaimer: This Podcast is taken from CNA.</i>