A soft landing for the global economy, which has seen immense stress in recent years, is increasingly a possibility, Union Finance Minister Nirmala Sitharaman said on Friday. While noting that better days lie ahead, mainly thanks to coordinated action between countries and multilateral financial institutions, the Finance Minister also said that economies are not yet recovering much.
“The biggest feeling that prevailed in the two-day discussions, both from the (International Monetary) Fund and the World Bank, is that there will be a soft landing. The efforts of the Fund, central banks and all institutions, Governments have kept inflation low for a meaningful period of time. Therefore, a soft landing is increasingly a possibility,” Sitharaman told a Washington DC-based global think tank.
“Then those reasonable growth figures will even come from the advanced economies. Certainly not in the negative sense. And then the coordinated action between countries to manage any supply chain shocks that have been the character of the global economy in recent years, let’s say, for at least two years, countries are facing much more preparedness, and therefore the feeling is that we can only have better days than what we have seen in recent years,” Sitharaman said during her appearance at the Center for Strategic and think tank International Studies (CSIS).
“But having said that, we all had to be careful because the economies are not really picking up that much yet. They are fine, you don’t see them falling any further, but there is still a subdued picture of global trade. Demand in advanced economies is not really that attractive. “Global trade will therefore not see opportunities for a major recovery sooner,” she said.
“As a result, countries that are highly dependent on commodity exports or that are part of the global value chain are not seeing a major increase in demand. The picture that emerges is therefore positive, but it will not change the situation quickly. “Every country has borrowed far more than they would ideally do for the sake of recovery from the coronavirus crisis, whether that was quality lending in the sense that borrowing for quality spending is on their balance sheet or not,” she said.
“As a result, it will be a challenge for most countries to gain any form of control over the budget deficit. If there is no drastic control, there should at least be gradual measures to reduce the budget deficit to a reasonable level. is the kind of view that has emerged and I completely agree with it because we (India) are growing rapidly due to one domestic market.
“We also have a challenge because there are still quite a few imports coming. But with the commensurate increase in exports not happening because our traditional export regions are not really picking up, we have a challenge that is more external than internal,” the spokesperson said. said minister.
Replying to a question, Sitharaman said India is trying to grow as fast as possible. “But what I would like to counter is the question: what is holding the investors back? Why are global investors, based on the textbook, where economic activity is good and robust and there are dynamic flows of money, the normal textbook assumption. I want to Ask where are the investable funds, where are the investors, why are they looking, what are they looking at? So that’s a question I like to ask,” she said.
“Even as I ask that question, I have to acknowledge that India has received a fair amount of foreign direct investment. That does not mean that nothing is coming to India. Yes, it’s coming. But with that coming, I still think there are more opportunities. lying, and while all the talk is China plus one, shared values, democracies, English speaking, demographic dividend, where the skills of Indian youth are so good that they are manning the GCCs of the world in India and the GCCs of the world in India outside. So the question would be what’s holding him back?” she asked.
“I don’t think anything is holding back the Indian economy. The policy works. Reforms are still underway and will continue to be so. There will be greater liberalization of the economy. We are making new friends and speaking more. about the Indian economy in more revenue, more platforms that are likely to be even more attractive to investors,” said Sitharaman.
