Tough times ahead
As the debate intensifies on whether the global economy is faced with stagflation, we seem to be certainly looking to one over here. True, growth momentum has turned out stronger than envisaged, but that owes a lot to last year’s massive credit impulse.
The “bifurcated” nature of post-Covid recovery, as elsewhere, is also helping, with manufacturing sector/exports doing well. We still very much doubt that growth momentum will last for much longer however, given myriad headwinds, cyclical as well as secular, that stand in the way.
Inflation remains high, at around 19%-20%, and there is little reason to expect it to soften much into next year, with global cost-push pressures, further currency shocks and unhinged pricing behavior likely keeping price pressures elevated throughout.
The CBRT, entirely subservient to the Palace at this stage, is being forced into a very dangerous game, having cut interest rates prematurely last month and sending signals that it would continue to do so.
Now read on...
Register to sample a report