Economy

NEW DELHI (Reuters) -Described as a “reluctant king” in his first stint as prime minister, the soft-spoken Manmohan Singh, who died on Thursday at the age of 92, was arguably one of India’s most successful leaders.Singh, the first Sikh to lead his nation, was prime minister from 2004 to 2014, serving a rare two terms. He had been undergoing care for age-related medical conditions.Singh is credited with steering India to unprecedented economic growth and lifting hundreds of millions out of dire poverty.”India mourns the loss of one of its most distinguished leaders,” said Prime Minister Narendra Modi.Born into a poor family in a part of British-ruled India now in Pakistan, Manmohan Singh studied by candlelight to win a place at Cambridge University before heading to Oxford, earning a doctorate with a thesis on the role of exports and free trade in India’s economy.He became a respected economist, then India’s central bank governor and a government adviser, but had no apparent plans for a political career when he was suddenly tapped to become finance minister in 1991.During that tenure to 1996, Singh was the architect of reforms that saved India’s economy from a severe balance of payments crisis and promoted deregulation, as well as other measures that opened an insular country to the world. Famously quoting Victor Hugo in his first budget speech, he said: “No power on earth can stop an idea whose time has come,” before adding: “The emergence of India as a major economic power in the world happens to be one such idea.”Singh’s ascension to prime minister in 2004 was even more unexpected.He was asked to take on the job by Sonia Gandhi, who had led the centre-left Congress Party to a surprise victory. Italian by birth, she feared her ancestry would be used by Hindu-nationalist opponents to attack the government if she were to lead the country.Riding an unprecedented period of economic growth, Singh’s government shared the spoils of India’s newfound wealth, introducing welfare schemes such as a jobs programme for the rural poor.In 2008, his government also clinched a landmark deal that permitted peaceful trade in nuclear energy with the United States for the first time in three decades, paving the way for strong relations between New Delhi and Washington. But his efforts to further open up the Indian economy were frequently frustrated by political wrangling within his own party and demands made by coalition partners.’HISTORY WILL BE KINDER TO ME’While he was widely respected by other world leaders, at home Singh always had to fend off the perception that Sonia Gandhi was the real power in the government.The widow of former prime minister Rajiv Gandhi, whose family has dominated Indian politics since independence from Britain in 1947, she remained Congress Party leader and often made key decisions.Known for his simple lifestyle and with a reputation for honesty, Singh was not personally seen as corrupt. But he came under attack for failing to crack down on members of his government as a series of scandals erupted in his second term, triggering mass protests.The latter years of his premiership saw the Indian growth story that he had helped engineer wobble as global economic turbulence and slow government decision-making battered investment sentiment. In 2012, his government was tipped into a minority after the Congress Party’s biggest ally quit their coalition in protest at the entry of foreign supermarkets. Two years later Congress was decisively swept aside by the Bharatiya Janata Party under Narendra Modi, a strongman who promised to end the economic standstill, clean up graft and bring inclusive growth to the hinterlands.At a press conference not long before he left office, Singh insisted he had done the best he could. “I honestly believe that history will be kinder to me than the contemporary media or, for that matter, the opposition parties in parliament,” he said.Singh is survived by his wife and three daughters. More

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Initial claims for state unemployment benefits fell by 1,000 to a seasonally adjusted 219,000 for the week ended Dec. 21, the Labor Department said on Thursday. Economists polled by Reuters had forecast 224,000 claims for the latest week.The claims data has been somewhat choppy since Thanksgiving, which economists see resulting from seasonality issues associated with the increase in temporary workers that businesses bring on board for the holiday season. Still, the level of new benefits claims was in line with its average over the last year of just over 220,000, with little indication of moving higher as layoffs remain muted. Meanwhile, those who have lost work are finding it harder to find a new job and are remaining on benefits rolls for a longer stretch and pushing up the ranks of those collecting unemployment benefits for more than the first week. The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 46,000 to a seasonally adjusted 1.910 million – the highest since November 2021 – during the week ending Dec. 14, the claims report showed. Economists had been expecting the level of continued claims to be 1.880 million.The average duration of unemployment in November was 23.7 weeks, the longest since April 2022, and has climbed steadily in recent months from fewer than 20 weeks in April. Still, the level of continued claims is only about 100,000 higher than it was a year ago, and while it has been edging up over the past 12 months, it has so far shown no sign of shooting higher as typically occurs in a deteriorating labor market.The continued claims data coincided with the survey week for the December nonfarm payrolls report, which will be released on Jan. 10, and suggests the pace of hiring likely has slowed this month from the 227,000 jobs added in November.”The rate of hiring has clearly slowed, based on evidence from a variety of economic data releases, driving the trend in continuing claims higher,” Jefferies U.S. economist Thomas Simons said in a note. “However, the data also shows that the rate of firing/lay-offs has not accelerated accordingly. This is unusual as there is typically an inverse correlation between the rates of hiring and firing, but current conditions reflect an acknowledgement that labor supply is scarce, likely to become more scarce, and thus more valuable to retain than it was in the past.”Simons currently is forecasting 170,000 new jobs for the December employment report, but said he expects to refine that estimate as new information surfaces in coming weeks.The latest claims data is unlikely on its own to influence the thinking of Fed officials, who last week lowered interest rates for the third time since September but signaled they are likely to take a break from further reductions with risks between the job market and inflation seen as roughly in balance.After concerns about the job market motivated policymakers to kick off rate cuts with an outsized half-percentage-point cut in September, data since then has given them greater confidence that the job market is cooling in an orderly fashion. At the same time, progress on bringing the rate of inflation back to their 2% target has stalled, motivating officials to adopt a wait-and-see posture regarding future adjustments to interest rates. More

Britain will hold its lead over France, which is projected to remain in seventh place, while Germany, Italy, and Spain are expected to slip down the global rankings. The UK is forecast to narrow the economic gap with Germany, which will be 20% larger than Britain’s economy in 2039, compared to the current 31%.“While this outlook is markedly better than key European peers like France and Germany, both of whom are expected to slip, this reflects a relatively poorer outlook for Eurozone economies rather than strong UK growth,” CEBR said.The report comes as Prime Minister Keir Starmer faces economic challenges during Labour’s early months in government. Official data show no economic growth since Labour took power in July, with survey indicators pointing to a weak end to 2024 and further strain into 2025.Starmer’s plans to drive faster growth through planning reforms, housing initiatives, and public investment aim to reinvigorate the economy. However, CEBR warns that recent tax hikes could weigh on short-term activity. Over the longer term, it expects Britain’s trend growth rate to stabilize at 1.8%.Globally, the United States is projected to retain its position as the largest economy, fending off competition from China. More

The revisions, announced Thursday, reflect improved export strength and recent policy easing aimed at stabilizing the economy, including measures to support the property sector and consumer spending.This marks a slight upward adjustment of 0.1 percentage points for 2024 and 0.4 percentage points for 2025 from the bank’s previous estimates.Despite the revised outlook, challenges persist, with the World Bank noting that weak household confidence, high local government debt, and a prolonged property downturn continue to weigh on economic activity.”Addressing challenges in the property sector, strengthening social safety nets, and improving local government finances will be essential to unlocking a sustained recovery,” Mara Warwick, the World Bank’s country director for China.China’s property market, a traditional driver of growth, is unlikely to recover until late 2025, according to the bank.Measures such as liquidity support for developers, reduced housing down payments, and state purchases of excess housing inventory have been introduced to mitigate the impact.The bank highlighted that fiscal policy could provide an additional boost, especially if Beijing signals increased central government spending.However, subdued domestic demand is expected to keep inflation low, with projections of 0.4% in 2024 rising to 1.1% in 2025.”It is important to balance short-term support to growth with long-term structural reforms,” Warwick emphasized, adding that clear policy communication is key to restoring confidence among consumers and markets. More

The growth outlook for October to December appears bright, with rural demand remaining resilient and urban demand picking up in the first two months of the quarter, according to the finance ministry’s monthly economic report for November. Growth slowed more than expected in July to September, hampered by weaker expansion in manufacturing and consumption. India has maintained that its economy will grow at a world-beating pace of 6.5%-7% despite a challenging environment. The outlook is expected to be better in October-to-March than in the first six months of the financial year, it said. “The combination of monetary policy stance and macroprudential measures by the central bank may have contributed to the demand slowdown,” the report said.India’s central bank has kept interest rates unchanged for 11 straight policy meetings, despite calls for rate cuts to support growth amid high inflation.For the next financial year starting April 1, 2026, the report said, newer risks have emerged, such as uncertain global trade growth and a stronger U.S. dollar.U.S. President-elect Donald Trump has threatened many nations, including India, with higher tariffs on imports, raising risks of a global trade war after he takes office on Jan. 20. Trump’s election victory has also fuelled a run-up in the dollar and U.S. yields. However, India’s growth outlook in 2025/26 and coming years is bright in terms of domestic economic fundamentals, the finance ministry’s report said. More

BEIJING (Reuters) – China revised upwards on Thursday the size of its economy by 2.7%, but said the change would have little impact on growth this year, as policymakers pledged more stimulus to spur expansion in 2025.Policy support late this year has set the world’s second-largest economy on track for a growth target of “around 5%” as activity warmed slightly, but challenges such as potential U.S. tariff hikes still weigh on prospects for next year. Gross domestic product (GDP) in 2023 was raised by 3.4 trillion yuan to 129.4 trillion ($17.73 trillion), Kang Yi, the head of the National Bureau of Statistics, told a presss conference, while releasing the fifth national economic census.He did not explain the reasons for the 2023 revision, but said the bureau would provide further details on its website within days.China’s economy has “withstood the test of multiple internal and external risks over the past five years, and maintained a generally stable trend while progressing,” Kang said. In previous five-yearly economic censuses, China revised up the size of the economy for 2018 by 2.1% and for 2013 by 3.4%.The fifth economic census carried out over the past five years encompassed the three years of the COVID-19 pandemic, which had a significant impact on the economy, Kang added.The international environment had witnessed “profound and complex changes” since the previous such census, he said. The revision of 2023 GDP would not have a significant impact on China’s 2024 GDP growth rate, Lin Tao, the bureau’s deputy head, told the same briefing, however.On Thursday, the World Bank raised its forecast for China’s economic growth in 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the property sector, would keep weighing it down next year.UPHILL BATTLE AHEADThe economic census will provide important data to help formulate tasks for China’s 15th five-year plan from 2026 to 2030, and help achieve its 2035 goals, Kang said, without elaborating.President Xi Jinping’s vision of “Chinese-style modernisation” envisages doubling the size of the economy by 2035 from its 2020 level.Government economists estimate that would require average annual growth of 4.7%, a target many analysts outside China consider overly ambitious.At an agenda-setting meeting this month, Chinese leaders pledged to increase the budget deficit, issue more debt and loosen monetary policy to support economic growth next year in expectation of more trade tensions with the U.S. when President-elect Donald Trump takes office in January.Last week Reuters reported that the leaders agreed to raise the budget deficit to 4% of gross domestic product next year, its highest on record, while maintaining an economic growth target of around 5%.The economic census showed the number of business entities in the secondary and tertiary industries at the end of 2023 rose 52.7% from the end of 2018, but growth of employment lagged, at 11.9%.The economic census showed changes in China’s job market, with 25.6% more people employed in the tertiary industries at the end of 2023 than at the end of 2018, but secondary industries had 4.8% fewer employees.As a severe property crisis hobbles a macroeconomic rebound, employees of property developers fell 27% to 2.71 million by the end of 2023 against the corresponding 2018 figure, the economic census data showed.Tertiary industries range from retail to transport, catering, accommodation, finance and property, while secondary industries cover mining, manufacturing, utilities and construction, for example. ($1=7.2992 Chinese yuan) More