Economy

BENGALURU (Reuters) – India’s economy likely grew at its slowest pace in one-and-a-half years in the three months to end-September as weak consumption offset a strong recovery in government spending, which for years has helped drive growth, a Reuters poll found.Asia’s third-largest economy grew more than 8.0% in the fiscal year to end-March but has since slowed sharply as skyrocketing food inflation drives up the cost of living and forces households to cut spending.Private consumption accounts for about 60% of India’s gross domestic product (GDP) but sales of items from cars to biscuits have plummeted.Passenger vehicle sales recorded their first decline in 10 quarters and sales of two-wheelers experienced a sharp slowdown, while lacklustre quarterly earnings from fast moving consumer goods (FMCG) company Hindustan Unilever (NS:HLL) showed the country’s consumption story was under strain.Gross domestic product in the world’s fastest-growing major economy was forecast to have increased 6.5% year-on-year in the July-September period, down from 6.7% in the preceding three months, according to the Nov. 18-25 poll of 54 economists in which forecasts ranged from 6.0% to 7.1%.That would mark the slowest growth in six quarters and a third consecutive quarter of slowing growth. Economic activity, as measured by gross value added (GVA), was forecast to show a more modest 6.3% expansion.”A host of high frequency indicators showed signs of slowing,” said Dhiraj Nim, an economist at ANZ.”Manufacturing and mining growth likely slowed during the quarter. Passenger vehicle sales put up a poor show, reflecting weakness in private consumption. While government capex provided some lift, the uptick in overall public spending excluding interest payments was not as sharp as expected.”The Reserve Bank of India (NS:BOI) (RBI), citing a rebound in private consumption, expects growth of 7.6% in the current quarter to end-December when the nation of more than 1.4 billion celebrates major festivals like Dussehra and Diwali.However, most economists in the Reuters poll said that was too optimistic.”I suspect (the RBI) is underestimating the length and severity of the current cyclical slowdown in growth, which is taking place amid a continued tightening in both fiscal policy and monetary policy,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.Economists downgraded their growth forecast for this fiscal year to 6.8% and for next year to 6.6%, from 6.9% and 6.7%, respectively, in a survey last month.India needs consistent economic growth above 8% to generate enough jobs for the millions of young people entering the workforce. More

Hong Kong has turned into a hub for many violations of U.S. trade controls, including export of controlled western technology to Russia and the creation of front companies to buy Iranian oil, the bipartisan leaders of the House Select Committee on the Chinese Communist Party said in a letter to Yellen, reviewed by the Journal. The letter, which is scheduled to be publicly released on Monday, said that Hong Kong has shifted from being a trusted global financial center to a critical player in the deepening authoritarian axis of China, Iran, Russia and North Korea.”We must now question whether longstanding U.S. policy towards Hong Kong, particularly towards its financial and banking sector, is appropriate,” it said, according to the Journal.The letter, signed by John Moolenaar, a Michigan Republican who chairs the committee, and Raja Krishnamoorthi, an Illinois Democrat who is the committee’s ranking member, cited research that shows nearly 40% of goods shipped from Hong Kong to Russia in 2023 were high-priority items such as semiconductors that Russia could use to prosecute its war in Ukraine, WSJ said.The U.S. Treasury department and the House Select Committee did not immediately respond to Reuters’ requests for comments. Hong Kong’s trade office in New York could not be immediately reached for comment. More

LONDON (Reuters) -British employers have been caught off guard by a 25 billion-pound ($31 billion) tax rise at last month’s budget and plan to cut training, investment and jobs in response, a leading employers group said on Monday.The Confederation of British Industry said a survey of its members showed 61% viewed Britain as a less attractive place to invest and nearly half intended to cut staff levels or lower pay rises after a big increase in employers’ social security payments.”The rise in National Insurance and the stark lowering of the threshold caught us all off guard,” CBI Chief Executive Rain Newton-Smith said as the organisation met for its annual conference.”Set alongside the expansion and rise of the National Living Wage … and the potential cost of the Employment Rights Bill changes … they put a heavy burden on business,” she said.Prime Minister Keir Starmer and his finance minister Rachel Reeves – who say speeding up economic growth is their top priority – argue the move will allow them to spend more on public services including the National Health Service.”I’m not surprised, quite frankly, that as we’re doing the tough stuff, there are plenty of people who say, ‘well, I’m impacted, I don’t like it’,” Starmer told ITV (LON:ITV) television.”But we’ve got to make the sort of big calls on the NHS and on schools that are really important for the here and now and for the future.”The CBI’s complaint comes amid broader signs of an economic slowdown in Britain both before and after the budget.Reeves has said she does not expect to have to raise taxes again by 40 billion pounds, part of the Labour Party’s first budget in 14 years.But Britain’s budget watchdog reckons Reeves has left little room to absorb any increase in government borrowing costs without either raising taxes or missing her goal to reduce debt.”Tax rises like this must never again be simply done to business,” Newton-Smith said.The big rises in national insurance and the minimum wage particularly hurts CBI members such as big retailers and hospitality chains who employ many low-paid part-time staff.Newton-Smith said greater economic stability under Labour was not enough on its own to boost growth, as reduced profits directly hit businesses’ ability and willingness to invest. “Profit’s not a bad thing.  It’s not a dirty word,” she said. Britain has low investment by international standards and many economists see this as a key cause of its weaker productivity compared to the United States, Germany and France.($1 = 0.7996 pounds) More

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Banks’ lending decisions will depend on debtors’ ability to repay debts, Sakkapop Panyanukul said in an article published on the Bank of Thailand’s website.The banking system has had a lot of excess liquidity over the past 10 years, as reflected by deposits and investments of commercial banks at the BOT in the past, he said. Those were as high as 4 trillion baht to 5 trillion baht ($115.64 billion to $144.55 billion), he added. Thailand’s government has cited high household debt as an impediment to its efforts to spur growth in an economy that has been slow to recover from the pandemic. It has been urging commercial banks to boost and widen credit access. The central bank’s responsible lending rules only state that banks must consider setting instalments that are appropriate for the debtors’ living expenses, Sakkapop said.Earlier on Monday, the Federation of Thai Industries said car production and sales have been hit by weak demand as financial institutions have tightened lending for vehicles.($1 = 34.59 baht) More

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