In this blog, we bring you a comprehensive overview of what to expect in the much awaited leap year of Georgian calendar. We will first cover our very own Indian economy and then the world at large.
The Union budget for the past few years have been on a conservative side, but this year it may be different. Ailing Indian economy is in desperate need of a fiscal stimulus, making the upcoming Budget 2020-21 a game changer. Income tax reforms, relaxation in FDI, fiscal spending on infrastructure and real estate can be the key highlights of the coming budget. India will certainly breach its fiscal deficit target of 3.3% for FY20 and can relax the target for FY21.
Automobile sector is set to see a sea change in 2020 with the implementation of BS VI norms from 1st April, 2020 on wards. Consequently, there will be a 15-30% hike in the vehicle prices. Furthermore, oil marketing companies will also need to provide BS VI fuel to comply with the norms. Currently very few petrol pumps in the country provide BS VI fuels. Hence, revival in auto segment can be remote.
Consumption is expected remain muted due to the ongoing job and investment crisis. However, 2020 will continue to see demand for internet based services which will be driven by freebies. Overall, we anticipate a modest year for India Inc. and a GDP forecast of sub 6% for the calender year 2020, biased by the 4.5% growth figure of Q3’2020. However, we prognosticate inflation to beat GDP growth in 2020 on the back of rise in food and fuel prices.
On corporate front, there should be large change in terms of market leadership in various sectors. Vodafone Idea will undoubtedly loose its top spot to Reliance JIO which is just short of 8.4 million subscribers to become the market leader. ITC which has been diversifying aggressively may give a hard time to HUL to catch the top spot. We believe the acquirer of Air India or Jet Airways will hit hard the Indian aviation sector and Indigo’s leadership may be challenged.
Indian stock market can behave erratically in 2020 as any sign of revival will shoot up the index while continuous despair will make bears strong who have struggled in 2019, despite unfavourable macro circumstances.
On the global front also, expectations are not so sanguine. Although the villain (trade war) has lost some of its strength due to recent collaboration between the heroes (China & US), we don’t anticipate myopic death of the villain. Furthermore, global debt is presently hovering around $250.0 trillion and leaves little space for a breather. We may see domino defaults if the situation doesn’t improve anytime soon.
The embarrassing Brexit game will finally come to an end in January’ 2020. Boris Johnson’s triumph in the UK elections has paved the way for Brexit. However, nothing will change until the end of transition phase (end of 2020), except the fact that the UK will lose its voting power in EU in 2020. General elections in the US in late 2020 will be a key event for the global economy. With the upcoming elections, we don’t anticipate any mercurial decisions from the tariff man.
Crude oil has recently gained momentum due to productions cuts and Iranian attacks. Nevertheless, analysts have discarded the short term price gains and expect Brent to hover around $60-$65/barrel. Central banks around the globe will shy away from any rate cuts (due to limited space). They will also refrain from any hikes given the weak global scenario. Hence, money is expected to flow to stronger emerging markets in search of higher yield.
Global markets will try to retreat in 2020, especially the Asian markets which have remained under pressure in 2019. US market’s buoyant move in 2019 may reach an inflexion point. European markets’ behaviour will be very much synced to the Brexit developments. Overall, 2020 will be a tough test for the economic shareholders.
With this, we wish all our readers and followers a very prosperous and wealthy new year. In 2020, rare4share has lot of surprises in store for all their readers.
Stay tuned. Keep sharing!!!!
Source: ET, Mint, IMF, Ministry of Finance, World Bank and RBI.