Tue, 21st November 2017

Anirudh Sethi Report


Archives of “world bank” Tag


A day after the International Monetary Fund cut India’s growth forecast because of the ‘lingering impact’ of demonetisation (DeMo) and the Goods and Services Tax (GST) roll-out, the World Bank has followed suit, projecting a drop on account of the ‘disruptions’ and ‘uncertainties’ associated with the same two initiatives. “India’s economic momentum has been affected from disruptions from the withdrawal of banknotes and uncertainties around the GST. Growth is expected to slow from 8.6 percent in 2015 to 7.0 percent in 2017,” the Bank said, noting that ‘sound policies around balancing public spending with private investment could accelerate growth to 7.3 per cent in 2018’.

Finance Minister Arun Jaitley, without explicitly reacting to the adverse projections by the two top multilateral financial institutions, put up a strong defence of the Narendra Modi Government’s two major economic initiatives, asserting these far-reaching reforms have put India on a far stronger track. “These are institutional reforms. These are structural changes. And these structural changes, I think have put the Indian economy on a far more sound track so that we can look forward for a much cleaner and much bigger Indian economy in the days and years to come,” he said at an event in Columbia University in New York. The IMF itself appeared to soften its grim forecast somewhat with its top economist Maurice Obstfeld commenting that India’s projected downgrade may just be a “blip” on an otherwise longer-term positive picture. “In general, the state of India’s economy is quite good. The government has energetically pursued structural reforms, including the GST which will have a payoff longer term,” Obstfeld, who is IMF’s Economic Counsellor and Director of Research Department, told a news conference.

The World Bank’s projection of 7 per cent growth in 2017, however, would appear to be less ominous than the IMF’s forecast of 6.7 per cent by trimming its earlier projection of 7.3 per cent for the year. In its updated South Asia Economic Focus, the Bank noted that after leading global growth for two years, South Asia has fallen to the second place, after East Asia and the Pacific, adding: “The region’s slowdown is due to both temporary shocks and longer-term challenges.”

IMF upgrades global growth forecast in 2017 and 2018

IMF raises global growth forecasts

  • Sees 3.6% global growth in 2017 vs 3.5% in July estimates
  • Sees 3.7% growth in 2018 vs 3.6% in July estimates

Christine Lagarde last week said the forecasts would be raised. You have expect that markets thought it would be more than a 0.1 pp bump. That said, I don’t think markets care to much about IMF forecasts.

Other highlights:

  • Sees US growth at 2.2% vs 2.1% prior
  • Sees 2018 US growth at 2.3% vs 2.1% prior
  • China growth seen at 6.8% this year vs 6.7% prior
  • 2018 China growth at 6.5% vs 6.4% prior
  • Eurozone to 2.1% from 1.9%
  • 2018 Eurozone 1.9% vs 1.7% prior
  • Japan to 1.5% this year from 1.3% prior
  • 2018 Japan to 0.7% from 0.6%

There is also this ominous warning:

“A closer look suggests that the global recovery may not be sustainable — not all countries are participating, inflation often remains below target with weak wage growth, and the medium-term outlook still disappoints in many parts of the world,” IMF chief economist Maurice Obstfeld says in report.

IMF hikes UK growth forecast to 2% in 2017

The International Monetary Fund has delivered another hike to its UK growth forecast, reversing nearly all of the downgrade it pencilled in after last summer’s Brexit vote.

In its latest assessment of prospects for global growth, the Washington-based fund predicted the UK economy will grow this year by 2 per cent, an increase of 0.5 percentage points from the forecast it made in January. The IMF also upgraded its UK growth forecast for next year, from 1.4 per cent to 1.5 per cent.

The world economy will grow faster than previously expected this year thanks to increased trade, investment and manufacturing said the IMF, which also warned the threat of protectionist policies meant “the balance of risks remains tilted to the downside”.

The revision came primarily due to better than expected economic news from Europe, China and Japan and a broad-based recovery in global manufacturing since the middle of 2016.

Before the UK’s EU referendum last year, the IMF forecasted that the UK economy would grow 2.2 per cent in 2017. But it cut the forecast to 1.3 per cent last July, weeks after the Brexit vote, and downgraded its forecast further, to 1.1 per cent, in October.

Asia needs $26tn for infrastructure through 2030: ADB report

Asia will need $26 trillion of infrastructure investment in the 15 years from 2016 to 2030, said a report published on Tuesday by the Asian Development Bank.

According to the report, titled Meeting Asia’s Infrastructure Needs, the region needs electricity supply chains to deliver power to the 400 million people who still live without electricity.

 Infrastructure investment in Asia currently meets only about half the demand. Aid from development agencies, such as the ADB, remains a mere 2.5% of total investment. The report calls on regional economies to provide financing through fiscal measures and to make use of private-sector money.

The report covered 45 countries and territories including China and India. To sustain the current level of economic growth, Asia needs $26 trillion over the 15-year period.

In the previous report, released in 2009, the ADB estimated that Asia would need $8 trillion of infrastructure investment between 2010 and 2020.

Former IMF Chief Sent To Jail As Spain Prosecutes 65 Elite Bankers In Enormous Corruption Scandal

In many other countries, excluding the United States, corrupt bankers are often brought to task by their respective governments. The most recent example of a corrupt banker being held accountable comes out of Spain, in which the former head of the International Monetary Fund (IMF), Rodrigo Rato was sentenced to four years and six months behind bars.

According to the AFP, Spain’s National Court, which deals with corruption and financial crime cases, said he had been found guilty of embezzlement when he headed up Caja Madrid and Bankia, at a time when both groups were having difficulties.

Rato, who is tied to a slew of other allegations was convicted and sentenced for misusing €12m between 2003 and 2012 — sometimes splashing out at the height of Spain’s economic crisis, according to the AFP.

The Future of Globalization

The cross-border movement of goods, services, and capital increased markedly for the thirty years up to the Great Financial Crisis.  Although the recovery has given way to a new economic expansion in the major economies, global trade and capital flows remain well below pre-crisis levels.  It gives a sense globalization is ending. 

The election of Donald Trump as the 45th US President has underscored these fears.   His first few weeks in office clearly mark a new era not just for America, but given its central role in late-20th-century globalization, for the world as well.   Trump is a bit of a Rorschach test.  He did not win a plurality, let alone a majority of the popular vote, but that does not stop pundits from claiming that Trump won because of this or that issue. 

There are some campaign promises which Trump has backed away such as citing China as a currency manipulator on his first day as President or pursuing legal charges against Hillary Clinton.  His priorities have been repealing the national health insurance, formally withdrawing from the Trans-Pacific Partnership, and signaled an intention to re-open the North American Free Trade Agreement.

Trump and his closest advisers seem intent to unwind not just his predecessor’s initiatives, but the general thrust of America’s grand strategy since the end of WWII.  His rhetoric of America First harkens back to Warren Harding, who succeeded Woodrow Wilson after the US Senate rejected the League of Nations.  Some historians refer to that period as ‘isolationism, ’ but in practice it was unilateralist.

World Bank latest reports says global growth to accelerate slightly

World Bank’s latest Global Economic Prospects report … headlines:

  • Forecasts global real GDP growth at 2.7% in 2017 vs 2.3% in 2016
  • Forecasts advanced economies’ growth at 1.8% in 2017 (vs 1.6% in 2016)
  • Emerging/developing economies’ growth at 4.2% in 2017 (3.4% in 2016)
  • Forecasts US growth at 2.2% in 2017 (vs 1.6% in 2016) … they say their forecast excludes effects of any policy proposals from trump administration


  • Challenges for emerging market commodity exporters are receding, while domestic demand solid in emerging market commodity importers
  • Fiscal stimulus in US could generate faster domestic and global growth, but extended uncertainty over policy could keep global investment growth slow
  • Forecasts China’s growth slowing to 6.5% in 2017 (from 6.7% in 2016)
(Headlines via Reuters)
The World Bank looking at the recovering oil and commodity prices, noting this eases the pressures on emerging-market commodity exporters. Expects the recessions in Brazil and Russia to end.
As always the Bank notes uncertainties in its forecasts (all forecasters should), with upside uncertainty (in the short term at least) on US potential increased fiscal stimulus, tax cuts, infrastructure spending.  Looking further out, though, a surge in debt load, higher interest rates & tighter financial conditions would have adverse effects.
Also downside potential on a more protectionist trade stance.

Half Of The Population Of The World Is Dirt Poor – And The Global Elite Want To Keep It That Way

Could you survive on just $2.50 a day?  According to Compassion International, approximately half of the population of the entire planet currently lives on $2.50 a day or less.  Meanwhile, those hoarding wealth at the very top of the global pyramid are rapidly becoming a lot wealthier.  Don’t get me wrong – I am a very big believer in working hard and contributing something of value to society, and those that work the hardest and contribute the most should be able to reap the rewards.  In this article I am in no way, shape or form criticizing true capitalism, because if true capitalism were actually being practiced all over the planet we would have far, far less poverty today.  Instead, our planet is dominated by a heavily socialized debt-based central banking system that systematically transfers wealth from hard working ordinary citizens to the global elite.  Those at the very top of the pyramid know that they are impoverishing everyone else, and they very much intend to keep it that way.

Credit Suisse had just released their yearly report on global wealth, and it shows that 45.6 percent of all the wealth in the world is controlled by just 0.7 percent of the people…
 As Credit Suisse tantalizingly shows year after year, the number of people who control just shy of a majority of global net worth, or 45.6% of the roughly $255 trillion in household wealth, is declining progressively relative to the total population of the world, and in 2016 the number of people who are worth more than $1 million was just 33 million, roughly 0.7% of the world’s population of adults. On the other end of the pyramid, some 3.5 billion adults had a net worth of less than $10,000, accounting for just about $6 trillion in household wealth.

And since this is a yearly report, we can go back and see how things have changed over time.  

Russia’s Most Potent Weapon: Rapidly “Hoarding Gold” As Global Currency War Is Upon Us

“He who holds the gold makes the rules?” notes SHTFPlan.com’s Mac Slavo… 

Fresh attempts at containing Russia and continuing the empire have been met with countermoves. Russia appears to be building strength in every way. Putin and his country have no intention of being under the American thumb, and are developing rapid resistance as the U.S. petrodollar loses its grip and China, Russia and the East shift into new currencies and shifting world order.

What lies ahead? It will be a strong hand for the countries that have the most significant backing in gold and hard assets; and China and Russia have positioned themselves very well. Prepare for a changing economic landscape, and one in which self-reliance might be all we have.

As The Free Thought Project’s Jay Syrmopoulos warns, Russia is Hoarding Gold at an Alarming Rate — The Next World War Will Be Fought with Currencies

With all eyes on Russia’s unveiling their latest nuclear intercontinental ballistic missile (ICBM), which NATO has dubbed the “SATAN” missile, as tensions with the U.S. increase, Moscow’s most potent “weapon” may be something drastically different.

The rapidly evolving geopolitical “weapon” brandished by Russia is an ever increasing stockpile of gold, as well as Russia’s native currency, the ruble.

Take a look at the symbol below, as it could soon come to change the entire hierarchy of the international order – potentially ushering in a complete international paradigm shift – and much sooner than you might think.

The symbol is the new designation of the Russian ruble, Russia’s national currency.

Pakistan dips back into the bond market

Pakistan is making its first foray into international bond markets in almost a year as the country’s three-year, $6.6bn bailout programme from the International Monetary Fund draws to a close.

 Citi, Deutsche Bank, Dubai Islamic Bank, Noor Bank and Standard Chartered have been hired to arrange the sale of a new 5-year sukuk – or Islamic bond – which will price later today.

The issuance marks Pakistan’s first appearance on international debt markets since a disappointing sale in late 2015, when the government’s hopes of borrowing $1bn were scuppered by high rates – forcing it to limit the sale of $500m.

According to the World Bank’s latest report, Pakistan has achieved greater macroeconomic stability in the last year, primarily due to fiscal discipline and a reduction in the current account deficit due to falling global commodity prices and the economy is forecast to grow by 4.7 per cent, up from 3.7 per cent three years ago. This has been reflected in higher prices for Pakistan’s existing bonds, which has pushed the yield on a 2024 bond down 2 percentage points since the start of the year to 6.4 per cent.

However the country faces a number of risks including deteriorating relations with India following an attack on Indian army base at Uri last month in which militants killed 17 soldiers. Indian officials claim the attack was perpetrated by Pakistan-based terrorist group, Jaish-e-Mohammad, and have vowed tough action in response.