Jamie Dimon, CEO of JPMorgan, advised people this month to prepare for an economic “hurricane” to come.
“This hurricane is right out there on the road coming our way. We don’t know if it’s Minor or Superstorm Sandy. You better get ready.
Those dark clouds seen by the revered Wall Street honcho turned darker this week as a slew of research houses predicted that the United States, the world’s largest economy, could tip into recession, carrying with them a multitude of counties.
The Citi Group said the probability of a global economic recession is now close to 50% as the Federal Reserve and other central banks work to fight inflation by raising interest rates.
Its analysts cited the impact of sharp interest rate hikes and signs of weakening consumer demand for goods while delivering the forecast update.
“Central banks can still engineer the soft – or ‘soft’ – landings embodied in their forecasts (and ours), but that will require supply shocks to subside and demand to remain resilient,” he said. he declares.
The threat of recession came at a time when India’s economy is returning to above-normal levels, driven by broad-based improvements in consumption, investment, industry and the external sector.
Even as India battles inflation, which is the highest above all central bank targets in Asia, things look optimistic with moderating commodity and edible oil prices.
But if forecasts of a “prolonged mild recession” in the United States materialize, the Indian economy should see slower growth. The United States accounts for about 18% of India’s merchandise export market and over 60% of India’s IT-ITS exports. Any slowdown there would also affect India. And the stock market, commodities and yields reflect this possibility.
While India grew by 8.7% in 2021-2022, this was largely due to the weak base caused by a 6.6% contraction in GDP the previous year. Compared to the pre-Covid period of 2019-20, the economy grew only 1.5% in FY22.
Still, experts are hopeful as they predict 7-7.8% growth for this fiscal year thanks to improved agricultural production and a revitalized rural economy. In addition to inflation, other indicators, including the GST and service sector growth, are on track. Hindustan Unilever Chairman Nitin Paranjpe said India was going through the toughest economic situation and lingering inflationary pressures were starting to weigh on demand.
RBI sees inflation remaining above its tolerance band through December, meaning the tough days will continue for consumers and businesses.
In a silver lining, the monsoon has started on a promising note and experts say it’s time to keep your fingers crossed.
As clouds of recession loom, the Reserve Bank of India this week stunned fintech firms by asking issuers of non-bank prepaid payment instruments not to load their wallets and cards from credit lines. credit or predefined borrowing limits. This has thrown fintech firms into a frenzy with one player even saying the central bank has bombarded the industry with its PPI clarifications. As it trumped fintech players, the central bank bailed out card companies by delaying new card standards until September 30. and others for bank fraud of Rs 34,615 crore, making it the biggest such case probed by the agency.
Well, from a CFO perspective, I think the NFRA story is remarkable. India’s accounting watchdog, the National Financial Reporting Authority, has ruled the appointment of EY’s audit subsidiary SRBC and Co as auditors of Infrastructure Leasing & Financial Services Ltd (IL&FS) ‘unlawful’. ), and said the audit firm had “compromised” independence.
As always, I add here the top 5 stories of the week not to be missed. If you have any ideas or comments, please feel free to share them with me at email@example.com
1. Tech Mahindra’s CFO focuses on margins amid high attrition
2. Rate hikes won’t significantly affect buyer sentiment: Vikas Wadhawan
3. Growth in tax collections shows GST is a success: tax expert Mukesh Butani
4,400 chartered accountants, company secretaries under the government’s target for the incorporation of Chinese front companies
5. Explanation: What is the GST input tax credit and what are the main challenges associated with it?
Happy reading, have a nice weekend