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Time of India
2 hours ago
- Business
- Time of India
India in a goldilocks situation, "nervous but exciting times" likely ahead, FinMin says in new report
The finance ministry on Friday said India's broader economic health is in a "relative goldilocks situation," with no major imbalances in the macro aggregates, a subdued inflation rate , and a growth-supportive monetary policy stance. In its monthly economic review for May, the ministry, however, cautioned against external challenges that could potentially impact India's growth trajectory, calling for close and continuous monitoring. The "outlook for India is one of cautious optimism," it said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo Global oil prices have retreated after a spike during the brief Iran-Israel war. However, while supply remains adequate at present, insurance costs and the "perceived risk of potential closure of choke points might cause the landed price to rise," the ministry said. "Therein lies the risk to India. For now, the risk has receded. But it is too soon to sound the 'all clear' for the rest of the year," it said. A persistent rise in global oil prices could have threatened India's growth and fiscal outlook in the current fiscal. Live Events Balancing Act "Thankfully, there is a ceasefire, and oil prices have retreated sharply," the report said. "But then, we have to get used to doing the balancing act or the high-wire act for some time to come," it added, while noting that India is on a better footing than many others. Global Brent crude oil prices had spiked 12% to $78.5 per barrel in the early hours of June 13 following the Israeli strike on Iran. On Friday, Brent futures were up 0.6% to $68.15 a barrel at 1328 GMT, but they were still poised for the sharpest weekly slide in about two years, as the conflict cooled off. India is looking to build on its economic health through critical agriculture, manufacturing, resources and technology missions, and deregulation initiatives aimed at boosting productivity, the review said. These could be "nervous but exciting times" for the Indian economy, it said. Geopolitical shifts may present India with opportunities that appeared remote earlier. But it's "up to us to be flexible enough to ride the tide". The review flagged that global growth continues to experience headwinds, with persistent trade frictions, heightened policy uncertainty, and ongoing geopolitical conflicts weighing on the broader economic outlook.
Bangkok Post
3 hours ago
- Business
- Bangkok Post
Navigating twin crises and tightened monetary policy
Financial markets in Thailand are confronting an unprecedented twin crisis, as political uncertainty from the audio clip scandal converges with escalating Middle East tensions that have rattled global capital markets. This dual crisis severely affected Thailand's economy, with the Thai stock index plunging to its lowest point in five years, declining nearly 24% year-to-date to become the world's worst-performing equity market. Thailand's political crisis stems from the withdrawal of the Bhumjaithai Party and its 69 MPs from the government coalition, creating political uncertainty. As of Friday, political pressure had pushed the SET index down, testing the critical support level of 1,085 points. Our analysis identifies three main scenarios with varying economic implications. The first scenario involves immediate parliamentary dissolution, though we reduced the probability of this outcome as the government is likely to retain its majority. This scenario would result in GDP contracting by 0.5 percentage points due to disruption of the budget process -- both fiscal 2025 disbursement and passage of the 2026 budget. The second scenario, which we consider the base case with increased probability, involves a cabinet reshuffle followed by dissolution after the fiscal 2026 budget is passed, with the economic impact consisting of GDP shrinking by 0.3 percentage points. The third scenario considers resignation or removal of the prime minister due to governance issues, carrying a moderate probability and resulting in a growth slowdown of 0.3-0.5 percentage points. Under this scenario, the Bank of Thailand may need to accelerate interest rate cuts by 50 to 75 basis points to support the economy amid mounting pressure from anti-government demonstrations and various legal developments that could escalate the situation. The US strike on Iran's nuclear facilities on June 22 significantly altered the Middle East conflict landscape. Brent crude initially surged 5.7% to $81.40 per barrel before falling below $70 as immediate supply disruption fears subsided. The Israel-Iran conflict began to ease following a ceasefire announcement with US mediation. Analysts suggest Iran's military effectiveness may now be diminished, while the fragile domestic economy is experiencing inflation near 40%. The US is reportedly preparing to open negotiations with Iran next week, which requires monitoring. MIDEAST SCENARIOS We forecast the probability of three Middle East scenarios. The base scenario, with 40% probability, anticipates temporary oil price increases before a decline, resulting in Thai economic growth of 1.4% and inflation of 0.5%. The adverse scenario, also with 40% probability, involves oil prices sustained above $85 per barrel, leading to growth slowing to 1.2%, while inflation increases to 0.8%. The crisis scenario, with a 20% probability, assumes Iran decides to close the Strait of Hormuz, potentially pushing oil prices to $130 or $140, resulting in economic growth of only 1% and inflation reaching 1%. In Thailand, the central bank's Monetary Policy Committee (MPC) voted 6-1 this week to maintain the policy rate at 1.75%, with one member favouring a reduction to 1.50% to support the slowing economy. According to the MPC, Thailand's economy in the first half of 2025 will expand better than projected, driven by exports, particularly to the US. As a consequence, the regulator revised its full-year GDP growth forecast to 2.3% from 2.0% earlier. However, the central bank believes export momentum is temporary, with heavy frontloading of shipments to the US to avoid higher tariffs. The economy faces risks in the second half from US tariffs, weak domestic demand and declining consumption amid reduced household income and confidence. The 2026 economic growth forecast was downgraded to 1.7% from 1.8%. We believe Thailand's economy will slow significantly in the second half, risking a technical recession. Thailand faces substantial risk of higher US import tariffs compared with other trading partners. Government budget disbursement remains below target, and despite expectations of acceleration in the second half, including 115 billion baht in stimulus projects, disbursement is expected to remain delayed due to uncertainty about government stability, preventing the public sector from fully driving the economy at a time of weak private demand. Contracting credit will further pressure domestic demand. With inflation clearly below the central bank's 1-3% target range and with no signs of demand-side inflationary pressure, there is room for further monetary policy relaxation. We maintain our view that the central bank should cut the policy rate at least twice more this year to 1.25% to alleviate household and business interest burdens, reduce tight financial conditions, and support a stable demand recovery. If the regulator doesn't cut rates in the third quarter, we see delays potentially weakening the economy, ultimately requiring more aggressive rate cuts later and further increasing risks to future economic stability. In terms of investment strategy, the SET is expected to remain volatile amid negative domestic and external factors as outlined above. However, we believe the SET index below 1,100 points, representing a 2025 price/earnings ratio of less than 12 times, is appropriate for medium- to long-term investment through gradual accumulation. Our investment strategy remains "selective buy" across four key areas. First, we recommend defensive stocks with low volatility that are expected to resist external market turbulence, specifically DIF, BDMS and BCH. Second, quality dividend stocks from the SET50 with SETESG ratings of A or higher should be considered to generate short-term cash flow, as these companies are expected to pay interim dividends from first-half 2025 profits with yields exceeding 2%, particularly ADVANC, BBL and PTT. Third, earnings-play stocks with strong profit momentum deserve attention, as we expect normalised second-quarter 2025 profits to grow, with ADVANC, CPALL and BTG leading this category. Finally, for investors with a high risk tolerance seeking trading opportunities amid the Middle East conflict, we recommend stocks benefiting from rising oil prices, specifically PTT and PTTEP.
Indian Express
3 hours ago
- Business
- Indian Express
Express View on Sensex closing at a 84,059 high: For now, a reprieve
This week has ended on a note of economic optimism, with the Sensex closing at 84,059, its highest level since October 1. The rupee has recovered to 85.5 to the US dollar, after having slid to below 86.9 on June 19. Brent crude prices, too, have softened to about $67 a barrel, after soaring to $79-plus at the start of the week. And the southwest monsoon has revived, with all-India average rainfall during June 1-27 being 10.3 per cent higher than the historical normal for this period. That's a turnaround from the situation till June 15, when cumulative rainfall was 31 per cent below normal and 30 out of the country's 36 meteorological subdivisions had registered deficits in excess of 15 per cent. That deficiency is now largely confined to Telangana, Andhra Pradesh, Marathwada-Vidarbha, Chhattisgarh, Bihar and the Northeast region. To be sure, these optimistic cues are less about genuinely positive expectations of the future than relief over the worst apparently being put behind. The ceasefire between Iran and Israel since October 24 was preceded, only a day before, by the former launching missiles at a US air base in Qatar and threatening to block the Strait of Hormuz — through which a fifth of the world's oil and a third of its liquefied natural gas flow. Those tensions have ebbed, for now. So have the uncertainties from the tariff war that US President Donald Trump unleashed in early April; they have seen some de-escalation with his administration claiming to have signed a truce deal with China. There has been a pause on the implementation of Trump's so-called reciprocal tariffs on other countries, including India, as well. But that three-month deadline ends on July 9. Simply put, there is only a temporary reprieve from the trade policy and geopolitical strains that may come back to haunt the global economy. India must keep the focus on the medium term. That would mean ensuring macroeconomic stability (the best defence against short-term global financial market and commodity price volatility, linked to geopolitical events) and ease-of-doing-business reforms to leverage its strengths (favourable demographics, a large consumer base and a potential alternative for investors looking at a China-plus-one strategy of diversifying their manufacturing and supply chains). The Indian economy has so far demonstrated relative resilience, recording the highest growth among the world's major countries amid elevated global uncertainty. But India has to do well relative to not just the world, but to the aspirations of its young population and workforce — both current and those entering over the next couple of decades. Navigating short-run geopolitical uncertainty may be easier than meeting challenges and seizing opportunities beyond the immediate term.
Express Tribune
4 hours ago
- Business
- Express Tribune
'Gas price hike will hit exports'
Listen to article Chairman Businessmen Group (BMG) Zubair Motiwala and Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Jawed Bilwani have strongly opposed the proposed gas tariff hike for industrial processes, calling it illogical and damaging for Pakistan's already struggling industrial sector. The proposal is expected to be discussed in the upcoming meeting of the Economic Coordination Committee (ECC). In a joint statement, Motiwala and Bilwani said the hike is unjustified in light of current global and domestic energy trends. They noted that Brent crude prices have declined and that the SNGPL system is already facing a surplus of imported RLNG, with 300 to 400mmcfd going unutilised due to high prices and excessive taxes. They argued that the government should focus on improving supply management instead of further burdening industry. They emphasised that although only 80 to 100 Independent Power Producers (IPPs) use process gas, more than 8,000 Small and Medium Enterprises (SMEs) rely on it. A tariff increase would cripple these SMEs, which form the backbone of Pakistan's manufacturing sector. Instead, they recommended a 20% reduction in gas tariffs to help SMEs stay afloat amid rising input costs and harsh budgetary taxes. The leaders highlighted that OGRA's recent decision on May 20, 2025, reduced SSGC's gas tariff by Rs103.95 per MMBtu to Rs1,658.56, reflecting falling global fuel prices. They questioned how a hike for industrial users could be justified when regulatory bodies themselves recognised falling costs. OGRA also set a revised tariff of Rs1,895.25 per MMBtu for SNGPL, which remains below the proposed rate. Petitioners during OGRA's hearings also flagged inflated RLNG diversion costs and unrealistic Brent crude pricing assumptions that distort true gas pricing. Motiwala and Bilwani warned that raising gas tariffs would worsen inflation, increase unemployment, and discourage local and foreign investment. Industry, already hit by electricity costs, currency instability, and shrinking demand, cannot absorb further shocks. They called on the ECC to immediately withdraw the proposal and conduct a transparent review of gas pricing, aligning it with OGRA's findings and global trends. "Burdening industry to offset inefficiencies elsewhere is unacceptable," they said. "Support for industry is essential for true economic recovery."
Business Recorder
4 hours ago
- Business
- Business Recorder
KCCI urges govt, ECC to withdraw gas tariff hike proposal
KARACHI: Chairman Businessmen Group Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI), Muhammad Jawed Bilwani, while strongly opposing proposal to increase gas tariff for industrial processes in the upcoming meeting of the Economic Coordination Committee (ECC), termed the proposal illogical and detrimental to Pakistan's already struggling industrial sector, particularly at a time when input costs are surging and exports are under severe pressure. Zubair Motiwala and Jawed Bilwani emphasized that the move is unjustified given the current energy market dynamics. They noted that international Brent crude prices have declined, and the SNGPL system is already dealing with a surplus of imported RLNG, with around 300 to 400 MMCFD going unutilized. This surplus exists because power and captive sectors are reluctant to purchase RLNG at exorbitantly high rates compounded by excessive taxes and levies, which has resulted in inefficient resource utilization. Rather than penalizing the industrial sector, the government should be working to improve gas supply management and rationalize pricing. They emphasized that while only around 80 to 100 Independent Power Producers (IPPs) utilize process gas, it is critical to recognize that the livelihoods of over 8,000 Small and Medium Enterprises (SMEs) also depend on this essential resource. Any increase in the gas tariff would severely impact the already struggling SME sector, which plays a vital role in the country's economic fabric. Rather than imposing a hike, a more prudent policy would be to reduce the process gas tariff by at least 20 percent, enabling SMEs to remain operational and contribute effectively to the economy, they suggested, adding that at a time when the business community is already burdened by the harsh taxation measures introduced in the budget, a tariff increase would only deepen their challenges. Given that the country has surplus indigenous gas, the logical course of action would be to offer it at lower rates to stimulate industrial consumption, boost production, and drive economic growth. They further highlighted that OGRA itself, in its decision dated May 20, 2025, approved a significant reduction in gas tariffs for SSGC by PKR 103.95 per MMBtu, setting the new rate at approximately PKR 1,658.56 per MMBtu. This decision was made in recognition of cost realities and declining fuel prices. 'If OGRA found justification to reduce the tariff for SSGC, how can the government justify a hike for industrial consumers?' Chairman BMG and President KCCI questioned. They added that such contradictory measures create serious disparities and undermine industry confidence in policy consistency. They also pointed out that OGRA's determination for SNGPL prescribed a revised price of Rs 1,895.25 per MMBtu, which is still below the proposed hike. Moreover, during OGRA's own hearing process, several petitioners highlighted the existence of a projected RLNG surplus of approximately 400 MMCFD; equivalent to 79,337 BBTU or nearly 25 LNG cargoes. Petitioners also demanded the revision of Brent crude pricing assumptions in OGRA's ERR, noting that the assumed price of USD 75.33 per barrel was higher than global spot rates, leading to artificially inflated diversion costs and non-transparent, non-cost-reflective pricing. Copyright Business Recorder, 2025
