Edition of the Digital Finance Download covering August 2024. A monthly update of significant developments in digital finance around the globe.

Growth will remain robust, the external position is strong because of large capital inflows and a small CA deficit, favorable demographics combined with reforms would raise potential growth to above 7%.

The result of higher oil prices is a shift in purchasing power from oil consumers to producers. Oil exporters are getting a boost to their terms of trade, leading to wider CA and fiscal surpluses. Higher energy prices will hurt several EMDEs that remain heavily dependent on petroleum imports.

We expect a stronger recovery in capital flows to Asia relative to other EMs in 2021. FDI remains an important driver, with India and Indonesia as the largest recipients. Relatively robust inflows and c/a adjustments in ‘20 allow for reserve accumulation. A reemergence of COVID-19 and geopolitical factors are the key risks to the outlook.

Many EM central banks started QE-like programs at the height of the COVID-19 crisis. This coincided with questions arising with respect to the financing of widening deficits. However, actual government bond purchases remain limited so far, including in Asia. Domestic investors appear to have stepped in to buy up additional sovereign issuance.

We analyze external adjustments in EM Asia following the COVID-19 shock. Cross-border flows are shifting considerably in many countries in the region. The global recession weighs on exports and weak domestic demand on imports. Other sources of FX inflows have come under significant pressure as well in H1. This includes both international tourism revenues and workers’ remittances.

Indian shadow banks were under pressure in 2018. They did not experience a severe funding crunch, but remain under continued pressure to deleverage. In response, shadow banks are lending a lot less, affecting overall credit supply and growth negatively.

Indian shadow banks came under pressure in 2018. We assess how much of a macro risk they pose.

The EM sell-off was quite intense in recent months, with major currencies in Asia depreciating significantly. We assess if this is a signal of systemic risk in the region, comparing external risk metrics in the 1997 crisis vs. now. Vulnerability is an order of magnitude lower today. Financing needs are much lower and reserves higher.

The Indian rupee is the worst-performing currency in Asia this year. We assess whether this reflects heightened external vulnerability, comparing risk metrics in the run-up to the taper tantrum vs. now. The current account deficit will widen, but not to 2012 levels. Reserves relative to external financing needs are higher now. External vulnerability persists but is less acute than in 2012.

Demonetization and GST were quasi-natural experiments, with profound and long-lasting impacts on the economy. This meant India missed the synchronized global recovery, but a rebound is underway from low initial conditions. Broad money has not recovered fully from demonetization, but credit growth and capital flows will support investment. Easing appreciation pressure will be positive for exports, even though structural competitiveness issues remain.

The growth outlook has improved as the economy is overcoming the impact of policy-related disruptions. Fiscal spending ahead of elections next year wi.

India: Is RBI Poised to Shift to a Tightening Cycle? "¢ The recent jump in inflation, market expectations for it to be elevated through mid-2018, and.

Government announces much-needed and expanded recapitalization program for state-owned banks. Complements efforts from May aimed at speedier debt reso.

Prime Minister Modi has focused on advancing digital finance as an important part of his structural reform program since coming to office in May 2014.

Economy hit by the demonetization and GST shocks, along with weak private investment. While temporary adverse factors should wane, the government inte.

Below-target inflation along with subdued manufacturing and investment prompted the Reserve Bank of India (RBI) to belatedly cut the repo or policy ra.

Chief Minister Nitish Kumar of Bihar rejoins the BJP-led National Democratic Alliance (NDA). Strengthens Prime Minister Modi's hand in the run up to t.

Economy in Transition Our recent visit found GST implementation, urgency on banking cleanup and Air India privatization along with solid macro, but w.

The banking system is saddled with large stressed assets stemming from strained corporate balance sheets. Efforts in the past several years to resolve.

As expected, RBI kept the repo or policy rate at 6.25% at its June 7 MPC meeting, looking through below-target inflation since November 2016 to stress.

In line with our expectation, yoy real GDP growth progressively fell to 7% in the quarter ending December 2016 and 6.1% in March 2017. The demonetizat.

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The BJP led by Prime Minister Modi resoundingly defeated the Congress and regional parties in the state assembly elections in Uttar Pradesh (UP), Indi.

Is the reflation trade coming back? China - capital outflows remain large India - RBI surprises, keeping rates on hold MENA - short-term pain, long-te.

Against the backdrop of global uncertainties and last November's demonetization shock, the budget adopts a sensible stance by slightly slowing fiscal.

The bold but controversial demonetization initiative is a political gamble and will adversely affect growth over several quarters, but should also hav.

1.' Jackson Hole to set tone for markets: ' As an eventful summer draws to a close, the backdrop for financial markets continues to appear relativel.

Japan-policy announcements disappoint (again) India-off to the races Global PMI and IP-hints of improvement Oil-sliding prices, but underlying tren.

Our recent visit for a Conference (held jointly with Exim Bank/NSE/IFC) on "Fulfilling India's Potential" found a generally positive mood with improvi.

1. FX in focus: ' As investors watch the Fed --which in turn appears to be watching the markets (see below)--U.S. rat.

Despite persistent headwinds, improving policies should help India maintain its position as one of the strongest performers among emerging markets. T.

Better sentiment lifts emerging markets-but will it last? EM portfolio flows-signs of finding a floor February PMIs - converging down India - budget g.

Growth has strengthened, although there are pockets of weakness. Real GDP rose 7.4% in the July-September quarter from a year earlier. P.

Prime Minister Modi's economic program has had many achievements in his first year in office and the second year priorities are sound. There were impo.

New IIF Capital Flows Report projects continued weakness in flows to EMs in 2015 India' RBI makes its move Saudi budget riding out the o.

Markets assess divergent G-3 monetary policy, slumping oil prices Global economy turning up but still fragile ECB-a promise to do more; a one-two punc.

The government sought to attract large capital flows to provide time for the twin deficits to adjust at a gradual pace, but the strategy came unstuck.

Investor-friendly measures and greater global appetite have precipitated a surge in foreign purchases of domestic stocks and bonds. The economy will b.

Subdued domestic demand, falling commodity prices and improving agricultural supply are contributing to a decline in the high inflation rate. The cent.

The government's renewed commitment to containing the large fiscal imbalance is underscored by stepped-up spending restraint since September, although.

A revival of reforms curbing subsidies, reinstating fiscal adjustment and attracting investment is lifting the economy, bolstering financial markets a.