A World Economic Forum Report
Despite several indicators reflecting satisfactory performance from economies around the world; we hear experts say, ‘‘the rich are getting richer, the poor even poorer.’’ Slow progress in living standards and widening inequality call for a more inclusive and sustainable model of development that promotes high living standards for all. To help bridge the gap between ‘what was’ and ‘what is being done’ the World Economic Forum System Initiative on Shaping the Future of Economic Progress in 2017 came up with a framework identifying 15 areas of structural economic policy and institutional strength which can contribute to the development of the bigger picture.
What gets measured gets managed. Majority of the countries chart their policies and allot investments according to growth statistics of Gross Domestic Product (GDP). This is a top-line measure which shies away from including factors that set off the pattern of economic activity and breadth of social participation - skill development, labor markets, competition and rents, investor and corporate governance, social protection, infrastructure and basic services among others. As a results, governments often fail to realize the opportunity of policy establishment and their possible contribution to growth in demand-constrained and low-productivity contexts. The World Economic Forum System Initiative on Shaping the Future of Economic Progress, in 2017, published a framework which can serve as a complementary bottom-line metric to evaluate shared socioeconomic progress.
Norway is the best performing advanced economy in 2018, with consistent strong performance. Small European economies are seen to dominate the Index. Of the G7 economies, Germany (12) is ranked highest, followed by Canada (17) and France (18). Performance is mixed among BRICS economies. China has ranked first among emerging economies in GDP per capita growth (6.8%) and labor productivity growth (6.7%) since 2012, its overall score is brought down by lackluster performance on Inclusion.
The Central Bank announced the Monetary Policy Statement for the second half of FY 2017-18 on January 29, 2018 in the wake of the banking sector’s acute inquisitiveness regarding new directives for lending. As the industry experts and economists labeled the MPS aptly as “Cautionary”, it sets a lukewarm tone for private sector lending. The private sector credit growth target set for H2, FY 18 is 16.8% which is modestly higher than that of last half (16.2%) and considerably lesser than the growth achieved in December’17 (18.13%). In another bid to tighten credit supply and enable banks to continue lending appropriate sectors, the Central Bank curtailed the Advance-Deposit Ratio (ADR) of conventional banks to 83.5% from 85% (89% IDR for Shariah based Islamic banks from 90%), in a separate circular. The new directive asserts that banks must show steady growth in deposit mobilization alongside lending, unlike the scenario till date. On another note, the effort of the Central Bank to curb excessive lending may have a bright impact on the mounting NPL trend. It is the time to discern how the banks maneuver the perfect deposit-lending portfolio mix aligning with the directions by Central Bank and still maintain the thriving growth of their profitability.Download View