May 2014


Global growth has strengthened in recent months, with few impediments due to geo-political tensions in Ukraine . With real Gross Domestic Output (GDP) stagnant at 0.2% in euro area, growth of Asian counterparts except for China , is estimated to be below trend for India and Russia with geo-political issues impacting trade flows. Overall, external demand was seen growing due to recovery in advanced economies along with China and Japan pushing the growth in Asia and Pacific region. In terms of business activity growth, a decline in largest economies of Asia was observed with China ’s manufacturing and service sector witnessing a decline. The entire Euro Area has seen a rise in new businesses and goods production with positive change in momentum in both service and manufacturing sector.

 World Bank in its Food Price watch report remarked that International prices of food increased by 4% between January and April 2014, driven mainly by increasing weather concerns and import demand. CPI in India reported increase at 8.59% mainly due to food prices, which poses a challenge for Reserve Bank of India (RBI) which plans to bring inflation down to 8% by 2015.Consumer Price Index (CPI) rose to 2% target rate in US fulfilling the attainment of target rate set by Federal Reserved. European economies finally reported a fractional increase in inflation to 0.7% with effects of Ukraine crisis weighting in on the performance of the region. UK reported a decline in trade surplus to 1.3 billion pounds with Japan exhibiting positive impacts of its economic reforms on its trade balances. Europe ’s trade surplus rose to 13.6 billion euros in February, owing to increase in exports in the region. Overall trade deficit economies reported a decline and trade surplus economies exhibited an increase in their balances.

 On account of unemployment, OECD reported a stable unemployment rat at 7.5% with 45.9 million unemployed. World’s leading economies of UK and US have reported a fall in unemployment rates at 6.8% and 6.3% respectively, with a trend towards growing employment in their labour markets. The positive impacts of monetary measures taken by central banks reflected in economic indicators at global level. Japan , Europe and UK kept their policy rates constant with a cautious approach in mind. World Bank approved USD 1.48 billion dollar economic package for Ukraine amidst growing tensions with Russia . Important report by international Labour Organisation (ILO) has detailed on its success of varied programs for empowering labour at global level by way of skill development and other measures.


GEM for the month of May 2014 is attached.


We welcome your suggestions and comments for the same.


Warm regards,


Dr. S P Sharma

Chief Economist


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