GLOBAL ECONOMY

International FINancial Slump? Greek Crisis

Trade Deficit Iran Deal- Effect on India

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First, determine the

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International

FINancial

Slump of

China

Greek Crisis

Trade Deficit

of India

Iran Deal

and its

effects on

India

The Iran nuclear deal, which will lead to removal of trade sanctions on India, is likely to keep crude oil prices under pressure. Iran has vast crude reserves and is expected to start exporting at full capacity again. This will add to the supply glut and lead to a further fall in prices once the deal is approved by the US Congress. This will lead to a further reduction in our import bill which means the fiscal envelope for this year looks to be in a great shape. With GST all set to begin next year, the disinvestment plan by the government and the increased cess on petrol and diesel means that the government is going to earn a lot and it is very important for Modi-Jaitley and Co to make wise decisions in terms of their investments in the coming years. With China falling and the crude oil prices further slumping, India has a big chance to capitalize on these opportunities.

Indias trade deficit narrows in May, but exports decline YoY. India exported USD 22.34 billion worth of goods in May versus USD 22.05 billion month-on-month. India's exports in the year-ago period stood at USD 27.99 billion, which is 20.19 percent lower in dollar terms and 14.14 percent lower in rupee terms. Imports during the period came in at USD 32.75 billion against USD 33.05 billion month-on-month.While the trade deficit is narrowing down, the reducing exports is becoming the rea cause of concern for the economy.

While all Western eyes remain firmly focused on Greece, a potentially much more significant financial crisis is developing on the other side of world. Undoubtedly, one of the most promising economies in the last two decades or so -China is slowing down and that too at a fast pace. The $ 9.24 trillion dollar economys growth is flirting around 7%, that when its average growth rate since 1989 was around 9.04 %. So, the big question here is will China bounce back ?Or will it succumb to a financial crisis ?

More than seven years after the worst of the last financial crisis, critics are still scolding the Fed and other central banks for their role in the downturn. And while many of us are still preoccupied with the post-crisis recovery, the Bank for International Settlements -an international organization of 60 central banks - says that its member organizations could already be laying the groundwork for the next crisis. "Domestic policy regimes have been too narrowly

concerned with short-term output

and inflation stabilisation, losing

sight of slower-moving but more

costly financial cycles," the report

said, adding that the global

monetary and financial system

have worsened the situation.

Greece and its European creditors announced an agreement in Brussels on July 13 that aims to resolve the countrys debt crisis and keep it in the eurozone, but that will require further budgetary belt-tightening On 22nd July, Greek MPs have voted by a wide margin to approve the latest economic reforms demanded by its lenders. Alexis Tsipras again faced down rebels within his own party who oppose a third bailout. This might help them in another bailout but the primary focus should however be to find ways to improve productivity and find employment to the citizens as more than a quarter of them are currently unemployed.