India Is Speaking Loudly and Carrying a Bigger Stick

Hello. Today we look at India’s attempts at reshaping the global order, traffic returning to China’s roadways, and where the good feelings are coming from in some of the world’s top economies.

A New Order

India, which is preparing to welcome the world’s finance titans in Bengaluru later this week, is using its fresh platform as Group of 20 host to push a range of changes to the traditional global order.

In a challenge to the decades-long norms led by the US and other Western powers, India has nominated itself as leader of the Global South — developing countries largely located in the Southern Hemisphere — and argued that these countries deserve greater say in international matters.

Where US President Teddy Roosevelt described his foreign policy over a century ago with the phrase “speak softly and carry a big stick,” India is ramping up the volume while arguing that its leverage is fast on the rise.

The South Asian giant of 1.4 billion, which recently has been seen to surpass China in population, is riding high on a fairly solid economic outlook even during tough times globally.

The gatherings in its tech capital of Bengaluru will allow a spotlight on the country’s efforts to attract more multinational firms’ production — in the face of debates around corporate governance that have arisen amid the ongoing saga of Adani Group.

China also will loom large as India makes this push, having long secured relationships in the Global South through its Belt-and-Road Initiative and debt financing.

The debt issues will be high on the agenda at the G-20 meetings, with debates around who needs to take more of a “haircut” via loan relief to distressed countries, as well as questions about how to revamp international debt financing and the multilateral development banks themselves.

Additional Reading

• Apple Supplier in India Begins Making Components for AirPods 
• Made-in-India GE Jet Engines Under Study as US Eyes Defense Ties
• India Vows Fiscal Prudence as Global Risks Weigh on Growth

chelle Jamrisko

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The Economic Scene

China’s economic activity accelerated in February as many residents returned to work after an extended Lunar New Year break, clogging roads in major cities and spending more at restaurants and shops.

Congestion in major cities last week was the worst since at least the start of 2022, according to data compiled by BloombergNEF and Baidu. The number of people riding the subway in Beijing, Shanghai, Chongqing and other major cities was back to or above pre-pandemic levels.

UBS Group’s latest China consumer survey, released Tuesday, showed an increase in dining out, shopping in stores and offline entertainment.

Today’s Must Reads

• Gathering pace | Euro-area business activity rose at the fastest rate in nine months in February — raising the likelihood that the bloc can avoid a downturn this quarter. Meanwhile, auto sales in Europe rose for a sixth month, led by robust growth in Spain and Italy.
• Sticky prices | Hardened inflation could mean more interest-rate hikes in Asia, an IMF economist said.
• Hike plans | Australia weighed a half-point hike, minutes of its central bank’s meeting show. Its counterparts in New Zealand could go for a hike of a similar size soon, says Bloomberg Economics. And Israel unexpectedly outpaced the Fed by opting for a half-point hike Monday.
• Crypto rise | Hong Kong’s crypto ambitions are getting a quiet blessing from mainland authorities.
• Brexit backing | UK Prime Minister Rishi Sunak is on a campaign to get Conservative rebels’ support for a post-Brexit deal on Northern Ireland. Separately, Chancellor of the Exchequer Jeremy Hunt has as much as ?30 billion ($36 billion) for short-term giveaways in next month’s budget after the public finances came in far better than expected in January.

Need-to-Know Research

Higher interest rates, geopolitical uncertainty, and squeezed real incomes haven’t spoiled the mood in large parts of the global economy.

And that might only drive prices higher in the first half of this year, further complicating the jobs of central bankers, Oxford Economics analysts led by Chief Global Economist Innes McFee write this week.

Wage growth and resilient employment are largely responsible for keeping up the good feelings — with measures like wage sentiment staying strong so far this year.

That doesn’t mean the global economy is out of the woods yet, they write. Consumer spending is stagnating in the US and Europe, and Canada presents a special area of weakness as sentiment is deteriorating alongside a weaker outlook for housing and credit conditions.

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