MACRO ECONOMIC NEWS

This Saturday Simply Brings Exuberance. 

Wishing A Highly Spirited Day Ahead.

 

Best Regards

Arbind

 

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Macro-Economic News 30 Jan 2021

 

Hope, economy, economic activities, and local trains are getting back on track. Economy rebounding with 11% in FY22 as seen by the survey and a call to print more money are eyeing at a V-shaped recovery from a downward revision of 2019-20 GDP with a soaring fiscal deficit of Rs 11.6 trillion and eight-core-industries output contracting by 1.3% in December. With Forex kitty swelling by a billion-dollar to $585 and non-food credit growing by 5.9% in Dec, Govt may spend more to boost growth leading to sustainability. 

Most economies of Europe outshine the earlier depressing forecasts of fourth-quarter growth with resilient output despite a resurgence of pandemic and reappearance of lockdowns. The US consumer spending decreases, inflation crept up, although household income and savings rose at the end of the last year.

With a little toned down significance and gut probability, the current economic recovery can be compared with the economic expansion post world war II, at least for some learning with glaring similarities of consequences. A case in point being the US in 1944-47 ‘destimulised’ the economy from 55% of GDP in 1944 to 16% of GDP in 1947. Yet real consumption grew by 22%, almost doubled the consumption of durable goods, more than doubled the private investment, and a six-fold increase in household expenditure although, GDP shrank by 13% - a more of a computational quirk. 

There was a substantial swift of a distressed economy to prosperity. And this happened with rising private investment and household expenditure ascertaining a much superior lifestyle for a wider population in coming decades. It may happen a lot quicker than we expect and costlier than we imagine, possibly. It is no strange that Investors are misjudging the pandemic-induced risk and subsequent imposition of capital controls.

For sure, we and all nations will win this war in 2020-23 and ... ... ... 

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