1 India FM sees strong growth (Straits Times) India’s economy grew an estimated 7-7.5 per cent last fiscal year and will keep growing this year, but the government will have to invest more in agriculture to keep up the momentum, Finance Minister Arun Jaitley has said.
Economists last month pegged India’s 2014/15 economic growth at 7.4 per cent and 7.8 per cent for the current year in terms of standard gross domestic product (GDP). Using a controversial new way of measuring GDP, India’s statistics office has said the economy has overtaken China as the world’s fast-growing major economy, at an annual 7.5 per cent in the fourth quarter of the fiscal year that ended on March 31.
“The country’s potential is not 7 or 8 per cent,” Jaitley said. “The country’s potential is to grow at double digit.” He said the agriculture sector was the biggest challenge for the government and that recent unseasonal rains have created an agrarian crisis.
2 Why the strong dollar is a worry for US (Nouriel Roubini in The Guardian) In a world of weak domestic demand in many advanced economies and emerging markets, policymakers have been tempted to boost economic growth and employment by going for export led-growth. This requires a weak currency and conventional and unconventional monetary policies to bring about the required depreciation.
Since the beginning of the year, more than 20 central banks around the world have eased monetary policy. In the eurozone, countries on the periphery needed currency weakness to reduce their external deficits and jump-start growth. But the euro weakness triggered by quantitative easing has further boosted Germany’s current-account surplus, which was already a whopping 8% of GDP last year. With external surpluses also rising in other countries of the eurozone core, the monetary union’s overall imbalance is large and growing.
In Japan, quantitative easing was the first “arrow” of “Abenomics,” prime minister Shinzo Abe’s reform programme. Its launch has sharply weakened the yen and is now leading to rising trade surpluses.
The upward pressure on the US dollar from the embrace of quantitative easing by the ECB and the BOJ has been sharp. The dollar has also risen relative to currencies of emerging markets with economic and financial fragilities: twin fiscal and current-account deficits, rising inflation and slowing growth, large stocks of domestic and foreign debt, and political instability.
Until recently, US policymakers were not overly concerned about the dollar’s strength, because America’s growth prospects were stronger than in Europe and Japan. But things look different today, and US officials’ exchange-rate jitters are becoming increasingly pronounced. The dollar appreciated much faster than anyone expected. Moreover, strong domestic demand has failed to materialize; consumption growth was weak in the first quarter, and capital spending and residential investment were even weaker.
The world would be better off if most governments pursued policies that boosted growth through domestic demand, rather than beggar-thy-neighbor export measures. But that would require them to rely less on monetary policy and more on appropriate fiscal policies (such as higher spending on productive infrastructure). The sum of all trade balances in the world is equal to zero, which means that not all countries can be net exporters – and that currency wars end up being zero-sum games. That is why America’s entry into the fray was only a matter of time.
3 The Syrian war through a child’s eye (Dawn) Nearly 14 million children have been affected in battle-torn Syria ever since the civil war began four years ago, according to the data by UNICEF. In the war between forces loyal to President Bashar al-Assad of Syria and those conflicting to his rule as well as jihadist militants from Islamic State, nearly 200,000 people have lost their lives.
About two million children have taken refuge in neighbouring countries of Iraq, Jordan, Lebanon, Turkey and Egypt. The brutal conflict in Syria is the worst of humanitarian disasters with about 7.5 million Syrian children currently in need of charitable help which is nearly 15 times the number in 2012 and nearly 2.6 million children no longer go to school.