Factory output in August was the poorest in seven years. The 2019 monsoon was the strongest in 25 years. India’s giant trade deficit with China takes centre-stage. India’s trade deficit with RCEP countries is over $100bn. India rejects e-commerce chapter of proposed RCEP agreement. US and China agree on terms of partial trade deal. UK and EU intensify talks as hopes of Brexit deal rise. Facebook’s Libra coalition continues to disband. Europe amps up scrutiny of 5G tech and Huawei. 400 all-time high temperatures were broken this summer.
Moving on to today's End of Day Wrap-up:
Table of Contents
And Way Down We Go: India’s factory output has contracted for the first time in two years, with both manufacturing and electricity output falling (-1.2% and -0.9% respectively) to negative territory and posting their worst performance in nearly seven years.
The Index of Industrial Production (IIP) released by the Statistics Department showed 15 out of 23 industry groups displaying negative growth in August. Motor vehicles, capital goods, consumer durables, intermediate goods – virtually all sectors have either slowed down, stagnated, or contracted. This could signal further rate cuts by the Central Bank and more government measures to support the slowing economy. Livemint
More Ain’t Merrier: This year, the monsoon was particularly erratic. In its initial weeks, rainfall was scattered and dismal, raising fears of drought and dry spells. As time passed, however, the rains picked up pace and the country ended up experiencing its heaviest monsoon in 25 years. While this has filled reservoirs and tanks – thereby safeguarding the rural economy well into the next year – it doesn’t particularly mean India’s farmers are on storm could nine.
In many areas, rainfall was so heavy that rivers flooded, thereby damaging fields. A combination of drought-like and flood-like conditions increased pest infestations and diseases. High downpours also hurt several crop plantations, mainly rice, cotton, sugarcane and soybean, increasing supply delays and decreasing farmers’ profits. ET Agriculture
Trade Makes the World Go Round: Prime Minister Modi is hosting Chinese President Xi Jinping in Tamil Nadu. It is their second informal summit, an attempt to bridge the economic and political divides between the two countries. At the top of the India-China asymmetry is the former’s giant $50bn+ trade deficit – the difference between imports and exports – with its northern neighbour.
In fact, India’s trade deficit with many countries is a topic of increasing relevance as global trade faces protectionist threats and slowdown doldrums. Moreover, the problem becomes all the more aggravated given the country’s trade deficit with 25 major countries has widened in recent years. ET Foreign Trade
Trade in India: Take the RCEP. The reason why there is so much pronounced domestic opposition to the deal is that historically when it comes to free trade agreements (FTAs), India tends to be at the receiving end. Post-FTA, imports from partners have surged even as exports faltered. According to NITI Aayog, India’s exports to FTA countries have not outperformed the overall export growth or exports to the rest of the world. India’s trade deficit with ASEAN and five other countries in RCEP, for instance, is over a staggering $100bn. Hindu BusinessLine
Data regarding India’s current trade deficit and historical trends regarding the same can be accessed here.
It’s Not Yet A Deal: Indian negotiators debating the RCEP deal in Bangkok have rejected the proposed bloc’s e-commerce provisions. Accepting these rules would have meant India would not be able to ask companies to store data locally, despite the fact that data localisation is required as per RBI regulations. Negotiations will now continue with the Intersessional Ministerial Meeting, which Commerce Minister Piyush Goyal will attend. The Hindu
It’s Sort of a Pre-Deal: In what could be the largest breakthrough yet in the 18-month-long US-China trade war, the two countries have reportedly agreed on the outlines of a partial trade deal, which could be the first phase of a broader accord. As part of the truce, China has consented to step up purchases of US agricultural goods and agreed to certain intellectual property measures and concessions related to financial services and currency. In return, Washington will delay a tariff increase that was due next week (although the levies scheduled for December are still in place). BBG
Rushing to Secure a Deal: The end of October is nearly upon us and Europe is abuzz with activity. Both sides of the English Channel want the year-long Brexit impasse to end and a deal finalised upon as swiftly as humanly possible. To that end, UK and EU officials are reportedly intensifying talks in an attempt to reach an agreement before a leaders’ summit on Oct 17, two weeks before Britain is scheduled to leave the EU. While significant obstacles remain, unexpected optimism from European Council President Donald Tusk following a meeting between the leaders of UK and Ireland sent markets and expectations soaring upwards. WSJ
On Your Mark, Get Set, Don't Go: The original coalition of 28 corporate backers of Libra, the digital currency planned by Facebook, is dwindling. One week after PayPal announced its withdrawal from the project, EBay, Stripe, Mastercard and Visa announced they were dropping out as well. The departures followed increased government scrutiny and criticism of the cryptocurrency as politicians from both major US parties called on Libra to be either regulated or disbanded altogether. They also happen ten days before Facebook CEO Mark Zuckerberg is scheduled to testify before the US House Financial Services Committee on his plans and intentions with Libra. CNBC
No Way, Huawei: Following the release of a public report on challenges related to 5G technology, European regulators are increasing scrutiny of the next-generation network. In particular, regulators are focussing on possible security threats from tech providers based out of countries with “no democratic and legal restrictions in place”, likely referring to China’s Huawei, which has a dominance over the new telecommunications technology. The EU is reportedly probing two main threats: the insertion of concealed hardware/software and the risk of uncontrolled feature updates or undocumented testing features. TechCrunch
Dubious Distinctions: In the last few months, the world was united by a dubious factor: all-time high temperature records were broken in many countries from France to Japan. Nearly 400 such records were set in 29 countries between May and August this year, which is when summer persists in most of the Northern Hemisphere. There were 1,200 instances of places being the hottest they’d ever been in a given month. And July was the warmest month ever recorded worldwide. BBC
Action and Inaction: Urbanisation picked up in earnest towards the end of the 20th century, and by 2050 cities will be home to more than 70% of the global population. Today, cities are at the forefront of fighting the climate crisis and adapting if things take a turn for the worse. Across the world from Copenhagen to Dhaka, mayors and city councils are proposing, passing and implementing sweeping legislations to cut down emissions, conserve biodiversity, reduce pollution and further climate action. But what do you get when cities act against the climate crisis but nations don’t? A bleak future.
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