The International Monetary Fund (IMF) revised down its 2020 forecast for the Asian economy to a contraction of 2.2 percent, calling it “the worst outcome for this region in living memory.” The latest forecast is a downgrade compared with the projection of a 1.6-percent contraction in June.
India’s economy experienced a much sharper than expected contraction in the second quarter, and is expected to recover slowly in the coming quarters, according to the IMF report, which projected India’s economy to contract by 10.3 percent this year.
The Indian government has said it is open to further stimulus measures to boost the coronavirus-hit economy. Finance Minister Nirmala Sitharaman had announced a slew of measures – a Rs 1.70 lakh crore Pradhan Mantri Garib Kalyan Yojana (PMGKP) in March, followed by the Aatmanirbhar Bharat Abhiyan package of Rs 20.97 lakh crore in May – largely focussed on supply side measures and long-term reforms.
The government is increasing its procurement of harvested crops, particularly paddy – in a hurry at the designated minimum support prices. Speaking on the 75th anniversary of the Food and Agriculture Organization (FAO), Prime Minister Narendra Modi said that minimum support price (MSP) and government procurement are important parts of the country’s food security, and it is important that the same continues to function with better facilities and in a scientific way. PM Modi added that the government is committed to the procurement of Agri crops at MSP.
Meanwhile onion prices have again started going north because of heavy rains in onion-growing districts of Maharashtra. The government has started a slew of measures to counter the price rise including releasing onion from its buffer stock, allowing imports and banning exports. It is also likely that the impending festive season might prompt traders to hoard onions for immediate profits.
The good news of the week is the government’s decision to supply fortified rice in schools covered under the mid-day meal programme as part of its effort to fight malnutrition. The rice supplied to these schools will be fortified with three micronutrients — vitamin B12, iron and folic acid. Micronutrients play an important role and finally the government is focusing on this area.
International demand that had supported the steel sector during the peak of the pandemic is now slowly being replaced with recovery in domestic demand. The steel sector’s shipments to auto firms have also improved by about 10%.
The recovery in global as well as Indian steel demand and prices, along with production normalisation, should drive better volumes and margins for most steel manufacturers.
India’s demand for copper and aluminium are likely to fall by around 20% during the financial year ending march 31, 2021, but are expected to rebound to around last year’s level in the third and fourth quarter.
India needs a well-developed non-ferrous metals industry as it provides important raw material to many sectors which are the backbone of economic development. As the demand in end-use sectors picks up in future, the non-ferrous metals industry will need to undergo a complete paradigm shift.
China accounts for half of the world’s steel production and consumption. It sets the tone for the global steel market. The World Steel Association (WSA) expects China’s steel demand to grow by 8 % this year, while the world demand during the period is expected to shrink by 2.4%.
Gold prices today closed the week at Rs 54,120 per 10 gm, while silver was trending at Rs 63,000 per kg. With life returning slowly to normalcy, people are also gradually venturing to purchase jewellery, giving hope to the industry that expects to do 60-65 per cent of the total business during the ongoing festivals.
The footfall to the retail stores has improved over the week, and jewellers are doing 40 per cent of the business from the earlier 20-25 per cent. As most of the wedding dates have been pushed to the last quarter, jewellers are expecting big spends on large jewellery items during this quarter.
There is a lot of pent-up demand in the market. Dussehra being the biggest single-day festival for shopping in many parts of the country falls on Sunday this year. Gold retailers and jewellers are expecting good sales this year with an increase in weekend footfalls.
COVID cases are now surging around the globe, threatening oil demand and sending oil prices back below $40. The U.S. reported more than 70,000 COVID cases for the first time in three months, and the trajectory suggests the U.S. may break new record highs in the coming days.
The numbers help explain weakening gasoline demand in the U.S., a theme also unfolding in Europe. The pandemic continues to largely cap any potential price rally. Crude remains stuck at $40, where it has traded for the better part of four months.
For the first time after months, Indian diesel sales registered the first year-on-year gain since the nation imposed a complete lockdown at the end of March as demand for the country’s most-consumed fuel climbed ahead of annual festivals.
Sales by India’s top three fuel retailers rose by 8.8 per cent from a year earlier during the first half of October to 2.65 million tonnes. Volumes sold were also 24 per cent higher than the same period in September, data showed.