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<ul class="summary-list"><li>Morgan Stanley estimated that bringing manufacturing back to the US could add $10 trillion to the economy.</li><li>The bank pointed to a 20-year stagnation of the industrial economy as production was sent offshore.</li></ul>The US economy could unlock trillions in value over the next decade if more manufacturing activity comes back to the US, according to Morgan Stanley.After decades of production activity being sent abroad, domestic manufacturing is starting to come back to the US, the bank said, a phenomenon known as <a target="_blank" class="" href="https://www.businessinsider.com/reshoring-trade-investors-safe-haven-bet-regardless-of-election-winner-2024-8">reshoring</a>. If domestic production continues to scale, the economy could gain as much as $10 trillion in value over the next decade, according to Chris Snyder, a US multi-industry analyst at the bank."After decades of offshoring and relying on international supply chains, the pendulum is swinging back toward domestic production," Snyder said in a recent <a target="_blank" class="" href="https://www.morganstanley.com/ideas/thoughts-on-the-market-supply-chain?cid=SM_CORP_YOUTUBE_Morgan+Stanley_20241028&amp;linkId=636499587">episode</a> for Morgan Stanley's "Thoughts on the Market" podcast. "In fact, we believe the US is entering the early innings of <a target="_blank" class="" href="https://www.businessinsider.com/us-economy-reindustrializing-how-to-invest-manufacturing-cyclical-quality-2024-7">re-industrialization</a> — a multi-decade opportunity that we size at $10 trillion and think has the potential to restore growth to the US industrial economy following more than 20 years of stagnation," he added.The <a target="_blank" class="" href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/september/">manufacturing sector continued to contract</a> in September, with activity declining for the 22nd month out of the last 23, per the Institute of Supply Management.Still, the sector is showing signs that the US is backing backing away from offshore production. The US's international trade deficit for goods and services declined to $70.4 billion in August, down $8.5 billion from the prior month, according to the <a target="_blank" class="" href="https://www.bea.gov/news/2024/us-international-trade-goods-and-services-august-2024">Commerce Department</a>.The Biden administration, meanwhile, has poured billions into its <a target="_blank" class="" href="https://www.businessinsider.com/us-semiconductor-chip-production-continue-harris-trump-presidency-arizona-jobs-2024-10">push to increase chip production</a> in the US and boost<a target="_blank" class="" href="https://www.businessinsider.com/biden-to-sign-executive-order-to-boost-us-manufacturing-2021-1"> the manufacturing</a> and industrial sectors. As of February of this year, annual investment in new manufacturing facilities hit a record $225 billion, according to a <a target="_blank" class="" href="https://www.jec.senate.gov/public/index.cfm/democrats/2024/4/fact-sheet-the-manufacturing-renaissance-that-will-drive-the-economy-of-the-future">memo</a> from the Senate Joint Economic Committee.Shifting production back to the US is expected to be helped along by new technology, like artificial intelligence and more advanced robotics and automation, Snyder said. That could be a boon for "high-tech" sectors in the US, he later added, pointing to the semiconductor, pharmaceuticals, and advanced manufacturing systems industries.Traditional industrial firms — like those in the auto and aerospace sectors — and companies that invest in more sustainable manufacturing are also expected to benefit from the reshoring shift, he added."All told, these businesses should see shorter supply chains, reduced legal and tariff costs, and a more resilient operational structure."The cumulative effects could be "pretty profound" across the US economy, Snyder said, with the boost to industry and manufacturing bound to raise GDP. Reshoring could also potentially undo the US's trade deficit with other economies, Snyder said."The US — with its robust tech sector and innovation ecosystem — is uniquely positioned to leverage technology to revitalize its manufacturing base," he added.

Bringing manufacturing back to the US is a $10 trillion opportunity for the economy, Morgan Stanley says

<ul class="summary-list"><li>China has announced a local government debt rescue program days after Trump won the US election.</li><li>Trump has threatened tariffs of 60% on Chinese goods, complicating China's economic gloom.</li></ul>China announced a debt rescue program to the tune of $1.4 trillion to save heavily indebted local governments and boost its economy.China's Standing Committee of the National People's Congress — its top legislative body — approved 6 trillion Chinese yuan to refinance local governments' hidden debt over three years, according to <a target="_blank" class="" href="http://politics.people.com.cn/n1/2024/1108/c1001-40357125.html">Xinhua state news agency.</a>Hidden debt refers to off-balance sheet liabilities issued by local government financing vehicles, or LGFV, to finance infrastructure investment.The plan also allows local governments to tap 4 trillion yuan in special local bonds over five years.The announcement came after the legislative body met from Monday to Friday.China's local governments have been struggling to repay their LGFV debt, which the <a target="_blank" class="" href="https://www.imf.org/en/Publications/CR/Issues/2024/08/01/Peoples-Republic-of-China-2024-Article-IV-Consultation-Press-Release-Staff-Report-and-552803">International Monetary Fund</a> estimated to be around 60 trillion as of last year. It's another risk to China's economy, which has been struggling with a <a target="_blank" rel="noopener" href="https://www.businessinsider.com/china-real-estate-property-market-speculation-debt-crackdown-xi-jinping-2023-8?utm_medium=ingest&amp;utm_source=markets">property crisis,</a> deflation, and high youth unemployment.Reuters reported last week that China's top legislative body was considering a plan to raise $1.4 trillion in extra debt over the next few years to fund part of an economic rescue package.As early as Monday, Chinese Premier Li Kiang drummed up market expectations for more <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-li-qiang-fiscal-stimulus-market-sentiment-us-election-2024-11">economic stimulus</a>, saying Beijing has "ample space for fiscal policy and monetary policy."The bumper stimulus came on the heels of Donald Trump's victory in the US presidential election earlier this week, which is likely to change Washington and Beijing's trade relationship.A China hawk, Trump has pledged to slap <a target="_blank" rel="" class="" href="https://www.businessinsider.com/what-us-economy-would-look-like-with-trump-biden-presidency-2024-5?utm_medium=ingest&amp;utm_source=markets">a 10% to 20% tariff</a> on all imported goods. He has threatened tariffs of 60% on goods imported from China.This would put further pressure on China's economy, which is still trying to recover following nearly three years of pandemic curbs.In late September, China rolled out <a target="_blank" rel="" href="https://www.businessinsider.com/china-economy-aggressive-monetary-stimulus-interest-rate-rrr-2024-9?utm_medium=ingest&amp;utm_source=markets">aggressive stimulus</a> that boosted sentiment and spurred a bull run in the stock markets. However, analysts say that Beijing still needs to do more to drive consumption.If Beijing's latest stimulus disappoints, it may be in part due to China's own policy conflicts between its socio-political and economic objectives and the constraints, Vishnu Varathan, Mizuho Bank's chief economist of Asia excluding Japan, wrote in a note a week before the debt rescue announcement.Notably, China may be still holding back to avoid one thing: "the optics of over-reacting to US elections," wrote Varathan.

China just announced an $1.4 trillion plan to rescue its local governments

<ul class="summary-list"><li>China is considering a fresh $1.4 trillion stimulus, <a target="_blank" href="https://www.reuters.com/world/china/eyeing-us-election-china-considers-over-14-trillion-extra-debt-over-next-few-2024-10-29/">Reuters</a> reported.</li><li>The package could be approved next week and would increase in size if Trump wins the election. </li></ul>China could approve a fresh round of stimulus in the next week, and officials in Beijing are eyeing even more aid for the country's economy in the event Donald Trump wins the US presidential election on November 5. <a target="_blank" class="" href="https://www.reuters.com/world/china/eyeing-us-election-china-considers-over-14-trillion-extra-debt-over-next-few-2024-10-29/">A report from Reuters</a> on Tuesday said the country's top legislative body could approve a plan to raise $1.4 trillion in extra debt over the next few years to deploy as part of an economic rescue package. The large fiscal stimulus would be increased if Republican nominee and former President Donald Trump wins the US election, the report says.Sources told Reuters the package would be approved by the Standing Committee of the National People's Congress (NPC) on the last day of its meeting next week.The package amounts to 10 trillion yuan worth of debt, with 6 trillion raised by special sovereign bonds and put largely toward aiding local governments deal with their debts, the report says. The remaining 4 trillion yuan would be raised by local government bonds and put toward idle land and property purchases, the sources told Reuters.The report says the officials are also considering another at least another one trillion yuan aimed at efforts including boosting consumption, and another trillion in capital for large state banks.The whopping $1.4 trillion amounts to over 8% of China's total economic output, but is still short of the country's stimulus measures from 2008 which totaled 13% of the country's GDP at the time.The sources say the measures would be confirmed on the last day of the NPC's meeting next Friday — giving ample time to factor in the results of the US presidential election, which takes place on Tuesday.If Trump is elected, the stimulus package could be higher due to the economic challenges Trump's policies would pose for China, the sources told Reuters. Trump has proposed sweeping 20% tariffs on imports, though he's pitched much steeper 60% tariffs on goods from China. The report comes a month after China announced its first round of stimulus measures, aimed at propping up its economy, which has struggled since reopening following the COVID-19 pandemic. The country has been plagued by a weak property sector and surging local government debt, as well as depressed consumer demand. Analysts appeared unimpressed with the <a target="_blank" href="https://www.businessinsider.com/china-economy-aggressive-monetary-stimulus-interest-rate-rrr-2024-9">initial rounds of stimulus</a>, with several top Wall Street analysts saying the measures aren't enough to solve the issues facing consumption or the <a target="_blank" href="https://www.businessinsider.com/china-economy-housing-property-stimulus-economic-growth-goldman-sachs-2024-10">housing market's structural problems</a>.Some have turned more optimistic on more recent measures, though. Earlier this month analysts from Goldman Sachs <a target="_blank" href="https://www.businessinsider.com/china-economy-growth-beijing-stimulus-reasl-estate-market-goldman-sachs-2024-10">upped their 2024 forecast for China's economic growth</a> from 4.7% to 4.9%, citing recent promises of greater public spending by the government.

China is eyeing $1.4 trillion in fiscal stimulus and even more if Trump is elected, report says

<ul class="summary-list"><li>Goldman Sachs and JPMorgan Asset Management are becoming a bit less bullish.</li><li>Although the US economic outlook is strong, returns may have been pulled forward.</li></ul>A pair of Wall Street juggernauts are getting slightly more skeptical about stocks and bonds, but a compelling investment opportunity may be hiding in plain sight.<div type="image" title="GS 10-year projection" height="1088" width="1508" msid="114505224" hostid="261" sizebytes="75402"></div>Goldman Sachs stole headlines recently by forecasting that <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-future-returns-decade-forecast-goldman-sachs-2024-10">US equities will only rise 3% a year in the next decade</a>, down from an average annual gain of 13% in the prior 10 years. The firm's rationale is based on a more challenging backdrop characterized by lofty valuations, an unusually high concentration in the market's biggest stocks, increased recession risk, lower profits, and elevated interest rates.<div type="image" title="GS 10-year projection baseline" height="742" width="1010" msid="114505227" hostid="261" sizebytes="35320"></div>Top minds at JPMorgan Asset Management (JPMAM) agree that stocks might not post the returns that investors have come to expect, though they're not nearly as pessimistic.The firm, which manages $3.5 trillion in assets, expects US large-cap equities to appreciate by 6.7% a year in the next 10 to 15 years, according to its yearly long-term capital market assumptions report released on October 21. For reference, JPMAM thinks global stocks will rise between 7.2% and 8.1% a year in that same span.A mid-single-digit annual gain for US large caps is nothing to sneeze at, though it would be down substantially from <a target="_blank" href="https://www.businessinsider.com/how-to-invest-economy-growth-outlook-recession-risk-inflation-jpmorgan-2022-11">7.9% two years ago</a> and <a target="_blank" href="https://www.businessinsider.com/how-to-invest-stocks-bonds-real-estate-outlook-strategy-jpmorgan-2023-10">7% last year</a>.There's a simple explanation for that marginally more tepid outlook: US stocks have been on a tear. And while <a target="_blank" href="https://www.businessinsider.com/stock-market-outlook-prediction-2025-how-to-invest-rally-trader-2024-10">some bulls are emboldened</a> by the S&amp;P 500's excellent track record, JPMAM strategists worry that the market has pulled forward future gains."Near the bottom of all these pages, we put a little statement saying, "Past performance is not indicative of future returns.' That's actually not true," said David Kelly, JPMAM's chief global market strategist, at a press conference about the report. "Past great performance is indicative of a more difficult environment going forward."The S&amp;P 500 is on pace to rise by at least 10% <a target="_blank" href="https://www.macrotrends.net/2526/sp-500-historical-annual-returns">for the fifth time since 2018</a> and the 11th time since the financial crisis, including what's been a 22.7% gain in 2024. That strength, combined with already-rich valuations, led JPMAM to cut its long-term projection for US large caps.<div type="image" title="JPMAM valuations" height="926" width="1038" msid="114505230" hostid="261" sizebytes="32120"></div>However, Kelly said the downward shift was gradual since the economic growth outlook is promising. The firm is calling for US real GDP of 2% in the long term, which is the highest mark since the pandemic, along with 2.4% inflation, which is down for the third consecutive year."The very good news is that we think that the foundations for the US economy and the global economy look better than they did a year ago," Kelly said. "We got through some of our more significant worries on inflation; economic growth looks pretty solid."<div type="image" title="JPMAM US GDP forecast" height="828" width="1032" msid="114505215" hostid="261" sizebytes="15222"></div><h2 id="ee7765b8-415d-46ac-862a-90df145c611f">As the 60-40 portfolio loses steam, real estate can take the baton</h2>Lower stock returns are expected to drag down the traditional 60-40 stock-bond portfolio, which JPMAM now says should fetch 6.4% a year for the next decade or so.That forecast is down from 7% last year and 7.2% heading into 2023, though it's higher than the <a target="_blank" href="https://www.businessinsider.com/alternative-investing-strategy-60-40-portfolio-bitcoin-outlook-inflation-jpmorgan-2021-11">4.3% mark in late 2021</a>, where US large caps were only expected to climb 4.1% a year in the long term after an outstanding rebound from the early pandemic lows.Bonds, which make up the second half of that calculus, have a solid but unremarkable outlook.US bonds broadly are expected to return 4.6% in the long term — down from 5.1% last year and the same as two years ago — while the US 10-year Treasury note is projected to fetch 4.2%, versus 4.6% last year and 4% two years ago. Meanwhile, high-yield bonds should deliver a 6.1% gain in the long term, compared to 6.5% last year and 6.8% two years ago.After accounting for inflation, JPMAM expects the standard 60-40 portfolio to return less than 5% in the long term, and the same is true of large-cap stocks and bonds. While such gains may be satisfactory for some, it would take over 16 years for an investor to double their money.Those looking for a more compelling investment opportunity should consider real estate, according to JPMAM. Unlike stocks and bonds, the firm's projected returns for that asset class are steadily rising, from 5.7% two years ago to 7.5% in late 2023 to 8.1% this year.US core real estate is projected to yield close to 6%, up from just over 4% a few years ago and well above the 10-year's yield of 4.2%. Real estate isn't cheap based on <a target="_blank" href="https://www.investopedia.com/terms/c/capitalizationrate.asp">capitalization rates</a>, which measure how much money a property generates relative to its market value, but JPMAM believes the asset class is an exceptional value relative to other yield-generating investments.<div type="image" title="Real estate vs 10-year yield" height="924" width="1032" msid="114505221" hostid="261" sizebytes="34048"></div>"If you were to look at this on a spread basis, the cap-rates spread would tell you that real estate looks a little bit expensive," said David Lebovitz, a global market strategist for JPMAM, at the conference. "But if you look at the all-in yield and think of that as your valuation and your starting point, we're looking at a generational opportunity."Monica Issar, JPMorgan Private Bank's global head of multi-asset and portfolio solutions, echoed that sentiment."This is absolutely the largest generational opportunity to invest in real estate in a long time," Issar said at the conference.Commercial real estate looks especially compelling, Issar said. Unlike residential real estate, which has held up well in recent years — as evidenced by <a target="_blank" href="https://fred.stlouisfed.org/series/MSPUS">remarkably resilient home prices</a> despite <a target="_blank" href="https://www.freddiemac.com/pmms">still-elevated mortgage rates</a> — office buildings have struggled to regain their value since the pandemic ushered in a new era of remote work for millions of Americans.As companies reduced their physical presence or eschewed offices altogether, demand for commercial spaces has taken a massive hit. However, Issar thinks that risk is reflected in prices."All we've been reading about and all we've been seeing is price declines and discussions about empty buildings," Issar said. "This is a time for investors to step in, move into attractive pricing, move into asset classes like non-core real estate."Investors can bet on a commercial real estate rebound by working with <a target="_blank" href="https://am.jpmorgan.com/us/en/asset-management/institutional/investment-strategies/alternatives/real-estate/">JPMAM's team</a>, or on their own through publicly traded real estate investment trusts (REITs). JPMAM didn't outline any specific investments to make, but Issar threw out a few ideas to help investors brainstorm."Think of multifamily housing; think of student housing around campuses; think of cell towers and data centers," Issar said. "That is the modernization of the new direct real estate that is going to be really attractive for investors in the future."

'Generational opportunity': Invest in real estate as stock and bond returns shrink, according to $3.5 trillion JPMorgan Asset Management

In response to higher-than-expected tax revenue and a record surplus transfer from the Reserve Bank of India (RBI), the Indian government is considering an 8-10% increase in <keyword id="20018917" type="General" weightage="20" keywordseo="capital-expenditure" source="keywords">capital expenditure</keyword> (capex) for the fiscal year 2025, according to Pantomath Group's quarterly report, "Market Kaleidoscope: Quarterly Market Insights." This adjustment could raise the capex from the previously allocated Rs 11.11 lakh crore, aiming to bolster infrastructure and economic growth. This fiscal boost comes as India reaches a historic financial milestone. The total market capitalization of all stocks listed on the Bombay Stock Exchange (<keyword id="19895774" type="General" weightage="20" keywordseo="BSE" source="keywords">BSE</keyword>) briefly surpassed $5 trillion for the first time, placing India among global giants such as the US, China, Japan, and Hong Kong. India's primary market is set for a dynamic period, with 55 companies planning to raise over Rs 68,000 crore through Initial Public Offerings (IPOs). The first half of FY2025 has already seen 35 mainboard IPOs, collectively raising around Rs 32,000 crore with an average subscription rate of 61 times. The Indian market maintained a positive outlook in the first quarter of FY2025, driven by strong Q4FY24 earnings, favorable economic data, and positive global cues. Despite early June volatility following the 2024 <keyword id="19895394" type="General" weightage="20" keywordseo="lok-sabha" source="keywords">Lok Sabha</keyword> election results, market sentiment improved with the BJP securing 272 seats and a total of 292 seats for the NDA with allied support. This political stability under Prime Minister Narendra Modi's leadership is expected to promote long-term economic growth, with a focus on infrastructure, electric mobility, startup support, power distribution, digital privacy, and healthcare initiatives. Corporate India's performance in the March quarter of FY2024 met expectations, showing double-digit growth in net profit and single-digit revenue increases. Non-lending companies experienced moderate operating margin expansion due to favorable commodity prices and cost controls. The peaking interest rates and continuity of <keyword id="19978691" type="General" weightage="20" keywordseo="government-policies" source="keywords">government policies</keyword> are anticipated to support healthy corporate growth in FY2025. <h2>Growth to continue</h2>The government's push for increased <keyword id="20068449" type="General" weightage="20" keywordseo="ethanol-production" source="keywords">ethanol production</keyword> targets a 20% blending by 2026, benefiting ethanol-heavy sugar companies and promoting biofuel goals. The real estate market is projected to grow significantly, requiring Rs 14 lakh crore in debt financing from 2024 to 2026. This growth will positively impact the banking and financial sectors. Major telecom operators have raised tariffs post-election, potentially improving sector financials and paving the way for sector re-rating. Major cement players are expanding through acquisitions, with an expected 6-7% compounded growth and market dominance by the top five players by March 2025. FMCG Companies expect recovery in rural business due to factors like a normal monsoon, robust crop yields, and government measures, maintaining robust rural demand. The potential roll-out of the FAME 3 Scheme to support <keyword id="19963112" type="General" weightage="20" keywordseo="electric-vehicle-sales" source="keywords">electric vehicle sales</keyword> is anticipated, with a budgetary allocation of around Rs 10,000 crore. Sectors such as auto, cement, defence, railways, consumer durables, energy, and banking are expected to outperform. Lagging sectors like IT and specialty chemicals offer value-buying opportunities at lower levels. The structural bull market for Indian equity is supported by strong domestic fundamentals and government reforms, with a positive medium- to long-term market outlook. Globally, the US market showed resilience, except for the Dow Jones. The Federal Reserve maintained interest rates at 5.25-5.50%, awaiting inflation to move towards the 2% target before considering rate cuts. The US GDP grew at 1.4% annually in Q1 2024, with mixed economic indicators highlighting both strengths and challenges. The Indian <keyword id="19926041" type="General" weightage="20" keywordseo="IPO-market" source="keywords">IPO market</keyword> has seen significant growth, with a surge in companies seeking to list shares and a rise in capital raised. The first half of 2025 saw strong retail investor participation, reflecting confidence in India's growth prospects. Mahavir Lunawat, Managing Director, Pantomath Capital Advisors Private Limited, said, "Favourable market conditions, high liquidity, a conducive growth environment with stable interest rates, and benign inflation have facilitated a boom in the IPO market. The IPO market will experience a stronger pull post-budget. India is set to become the new equity funding frontier for global corporations." He further added. "We are on the brink of sustained, long-term momentum in the IPO market, with this year potentially becoming the best for IPOs. India's solid macroeconomic environment and promising growth prospects create an ideal backdrop for this vibrant IPO market. Additionally, there is robust participation from both domestic institutional investors and retail investors." With the Indian government's potential capex increase and the robust primary market activity, the <keyword id="19948184" type="General" weightage="100" keywordseo="Indian-economy" source="keywords">Indian economy</keyword> is poised for sustained growth. The upcoming period is expected to see heightened market activity, further IPOs, and economic stability, creating a conducive environment for investment and development.

India may boost FY25 capex by 8-10% amid surging revenues and record RBI surplus, says Market Kaleidoscope report

<ul class="summary-list"><li>Russia's economy is staring at "near stagnation," according to Anders Åslund.</li><li>The Swedish economist thinks sanctions are biting into economic growth. </li></ul>Russia's economy is coming closer to a near-stop — and Moscow looks bound to run out of resources to fund its war against Ukraine.That's according to Anders Åslund, a Swedish economist who says Russia's economy is taking a bigger hit from Western sanctions than some believe.While Putin has blown off the impact of Western restrictions, sanctions could be knocking off as much as 3% of Russia's GDP each year, Åslund estimated — the equivalent of $56.4 billion a year, given <a target="_blank" href="https://tass.com/economy/1743227">Russia's current dollar GDP</a> of $1.88 trillion in 2023."Contrary to what the Kremlin would like others to believe, time is not on Russia's side," Åslund wrote in an op-ed for <a target="_blank" class="" href="https://www.project-syndicate.org/commentary/russia-war-economy-weakening-under-sanctions-by-anders-aslund-2024-10">Project Syndicate</a> on Tuesday. "My own view is that the current sanctions regime shaves off 2-3% of GDP each year, condemning Russia to near stagnation. Moreover, the situation will get only worse for Putin, perhaps even impeding this campaign of aggression against Ukraine."Russia's GDP technically grew 3.6% last year, with another <a target="_blank" href="https://www.imf.org/en/Countries/RUS">3.2% real GDP growth expected in 2024</a>, according to estimates from the International Monetary Fund. But economists have noted that much of Russia's growth has been fueled by aggressive government <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-military-spending-currency-inflation-budget-2024-9">spending on the war</a>, while longer-term indicators of economic health have soured.<a target="_blank" href="https://www.businessinsider.com/russia-economy-outlook-ukraine-war-worker-shortage-population-brain-drain-2024-8">Labor productivity</a>, for instance, dropped more than 3% last year, thanks partly to an ongoing brain drain in the nation's workforce.Russia's energy business, which supplies a major portion of its total revenue is also struggling. Moscow's <a target="_blank" href="https://markets.businessinsider.com/news/commodities/russian-energy-revenue-crude-oil-prices-gas-exports-sanctions-ukraine-2024-1">oil and gas revenue dropped</a> by nearly a quarter in 2023, thanks to tumbling oil prices and sanctions targeting the nation's energy trade.Inflation, meanwhile, is roaring. <a target="_blank" href="https://tass.com/economy/1847635">Consumer prices rose 8.5% year-per-year</a> the week of September 17, according to official figures from Russia's Economic Development Ministry. It's likely prices are running even hotter than what those figures suggest, Åslund said, pointing to a long history of Russia understating inflation numbers during the time of the Soviet Union."The only sectors of the Russian economy that are growing are the military and related infrastructure, where state-owned companies sell to the state at (probably inflated) administered prices. The rest of the economy is flat at best," Åslund wrote.Russia is also in a tough spot when it comes to financing the war against Ukraine. The nation has had difficulty borrowing cash from other countries after it was shut out of SWIFT, the global financial communications system, which means that the economy is primarily feeding off tax revenues and reserves.Russia has depleted a large chunk of its National Wealth Fund, which had around <a target="_blank" class="" href="https://www.reuters.com/markets/europe/russian-national-wealth-fund-rises-1415-bln-june-1-2024-06-05/">$56 billion</a> left in liquid assets at the start of June, according to data from Russia's finance ministry.While Russia has moved to raise <a target="_blank" class="" href="https://tass.com/economy/1816407">personal</a> and <a target="_blank" class="" href="https://tass.com/economy/1816413">corporate taxes</a>, that's unlikely to make a huge difference in the grand scheme of the Kremlin's finances, Åslund said, as there aren't many bond buyers keen to pick up Russia's debt."Including all the hidden costs, Russia will probably spend about $190 billion, or 10% of GDP, on the war this year, and that figure presumably represents the peak, given the constraints imposed by Western financial sanctions," he added, suggesting Russia could only sustain its war efforts for a limited amount of time. "Whenever Russia can no longer finance a budget deficit, it will have to cut public expenditures, and its non-military outlays have already been pared to the bone."Economists have warned that a <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-stagflation-recession-inflation-gdp-growth-ukraine-war-2024-9">dark and uncertain</a> future is looming for Russia, with the mounting costs of the war cannibalizing<a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/putin-russia-economy-ukraine-war-wagner-mutiny-rebellion-west-sanctions-2023-7"> key parts of its economy</a>. At this point, the Kremlin's war spending is likely the only thing preventing the nation from <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-military-spending-currency-inflation-budget-2024-9">slipping into an immediate recession</a>, economists told Business Insider.

Russia's economy faces 'near stagnation' with sanctions whittling down annual GDP growth, European economist says

<ul class="summary-list"><li>Former President Trump's remarks about Taiwan have raised uncertainty within the chip industry.</li><li>In a recent Bloomberg Businessweek interview, he said Taiwan should pay the US for its defense.</li></ul>Former President Donald Trump during a recent interview with Bloomberg Businessweek waded into the US-Taiwan relationship head-on, suggesting he might upend their long-standing economic relationship. Trump said Taiwan took the US chips business and that it should pay the US for defense."They did take about 100% of our chip business. I think Taiwan should pay us for defense. You know, we're no different than an insurance company. Taiwan doesn't give us anything," Trump <a target="_blank" href="https://www.bloomberg.com/news/videos/2024-07-16/trump-suggests-taiwan-should-pay-us-for-protection-video">said in the interview</a> published Tuesday."Taiwan is 9,500 miles away," he added. "It's 68 miles away from China."China continues to view Taiwan as a breakaway province. But Taiwan has long defended its right to self-rule away from the grips of Beijing.Trump's stance could also have major implications for Taiwan's dominance in semiconductor-chip manufacturing should a conflict arise between Taiwan and China. Such a scenario would likely have a cataclysmic effect on the US economy if the global chip supply chain was disrupted.It is worth noting Trump's "make them pay" rhetoric isn't new, or unique to Taiwan. He's said <a target="_blank" class="" href="https://www.politico.com/news/2024/02/14/trump-nato-allies-00141590">similar things</a> about NATO for years, and he campaigned in 2016 on making Mexico pay for a border wall (Mexico <a target="_blank" class="" href="https://www.cnn.com/2023/10/30/politics/fact-check-trump-mexico-piece-border-wall/index.html">did not</a> pay for the wall).And there's also Trump's new running mate, <a target="_blank" class="" href="https://www.businessinsider.com/where-does-trump-vance-stand-on-china-tariffs-inflation-taxes-2024-7">JD Vance</a>. The Ohio senator, on paper at least, appears to have a different view on Taiwan and its importance from the former president's. A critic of US support of the war in Ukraine, Vance has <a target="_blank" class="" href="https://www.cnn.com/2024/07/18/china/trump-vance-china-taiwan-analysis-intl-hnk/index.html">called</a> China "the real issue" and said that key American weapons being used by Ukraine should be preserved in case war breaks out between China and Taiwan.President Joe Biden, for his part, has said the US would defend Taiwan "if there was an unprecedented attack" from China.<h2 id="5a29dc9f-c277-4f18-a2d4-89340e1321e8">The semiconductor influence</h2>Taiwan <a target="_blank" class="" href="https://foreignpolicy.com/2023/02/17/united-states-taiwan-china-semiconductors-silicon-shield-chips-act-biden/">manufactures</a> more than 60% of the world's semiconductors and produces about 92% of the globe's advanced semiconductors, Foreign Policy reported in February 2023.And Taiwan's microchip production is anchored by the Taiwan Semiconductor Manufacturing Co., a global powerhouse.A study authorized by the US State Department found that any temporary halt to Taiwan's chip production from a Chinese blockade could result in <a target="_blank" class="" href="https://www.ft.com/content/c0b815f3-fd3e-4807-8de7-6b5f72ea8ae5">roughly $2.5 trillion</a> in annual losses globally, according to the Financial Times.It's the sort of impact that would surely reverberate for years.Trump said in the Bloomberg interview that Taiwan had gotten rich as it "took" America's microchip business."How stupid are we?" he asked.The ex-president's remarks are significant because the US has a vested interest in preserving strong ties in the Indo-Pacific region given the disproportionate impact that Taiwan has on the US economy.Taiwanese chips are used in everything from cellphones and electric vehicles to microwaves and manufacturing equipment. This reality has made many US policymakers even more aware of Taiwan's huge role in America's economic vitality.<h2 id="ed214bc6-e698-4973-8df3-f8b541482b92">Becoming a major chip player once again</h2>The CHIPS and Science Act, which Congress passed and Biden signed into law in 2022, was <a target="_blank" class="" href="https://www.businessinsider.com/chips-act-bill-to-boost-us-chipmaking-competition-with-china-2022-7">crafted to boost semiconductor manufacturing</a> in America. The law set aside $39 billion in manufacturing incentives for chip production in the US.Biden heavily pushed the legislation as a way to bolster supply-chain resilience while keeping the US competitive against China.The Biden administration recently floated using <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-07-17/us-considers-tougher-trade-rules-against-companies-in-chip-crackdown-on-china">a stringent trade restriction</a> known as the foreign direct-product rule to block China from using advanced chipmaking tools, Bloomberg reported."The potential for more restrictions is real," CJ Muse, the senior managing director at Cantor Fitzgerald, <a target="_blank" class="" href="https://www.youtube.com/watch?v=dGraDgFLyiU">told CNBC</a>."The intent is really to limit China's ability to build leading-edge semiconductors, and I think that the efforts the Department of Commerce and BIS have put through have done that," he added, referring to the Bureau of Industry and Security.A recent report released by the <a target="_blank" class="" href="https://www.semiconductors.org/emerging-resilience-in-the-semiconductor-supply-chain/">Semiconductor Industry Association</a> said that America's share of global chip manufacturing was set to increase to 14% by 2032. Currently, the US has a 10% share, reflective of years of manufacturing operations being sent offshore — which put the country at a competitive disadvantage.But the US still faces an uncertain future regarding chip production should Trump sit in the White House again, as fears have risen of supply-chain disruptions if there's a conflict involving Taiwan.After Trump's latest remarks about Taiwan and the potential for tighter trade curbs on China, <a target="_blank" class="" href="https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-earnings-07-17-2024">global chip stocks fell</a>, with notable declines for Nvidia, TSMC, and Qualcomm, among others.<h2 id="884df14e-6a4a-4eb9-a0b0-72945b0099f3"></h2>

Trump's stance on Taiwan could be devastating for the US economy

<ul class="summary-list"><li>Baby boomers' wealth is an "underappreciated" risk to the economy, a portfolio manager told BI.</li><li>That's because they could be heavily impacted by swings in stock and home prices.</li></ul>One of the economy's most powerful engines may be at risk. That's because baby boomers, America's second-largest and <a target="_blank" class="" href="https://www.businessinsider.com/us-economy-baby-boomers-are-driving-economic-strength-ed-yardeni-2024-4">richest generation</a>, could abruptly dial back their spending at the first sign of economic or market turmoil, according to Brij Khurana, a fixed income portfolio manager at Wellington Management.Khurana thinks what has made boomers the wealthiest generation — stocks and housing — also makes them a risk to economic stability. Even a mild correction to asset prices could spook older Americans enough to rein in their spending and kick out a key support from under the economy, he told Business Insider.Such a scenario is an '"underappreciated risk," he said, given how much boomers' spending habits have fueled economic growth in recent years.The generation is already flashing early signs that their spending power is starting to wane. Despite shelling out on travel in recent years, just 19% of baby boomers said they planned to splurge in 2024, according to a <a target="_blank" href="https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/the-state-of-the-us-consumer">McKinsey &amp; Company</a> survey, lower than the average 38% recorded across all generations.Boomers are also signaling that they're beginning to rotate out of stocks and into longer-duration fixed income, Khurana says, pointing to the rally in long-dated US Treasuries. The iShares 7-10 year Treasury bond ETF is up 6% over the last year."I do think that's partly due to some asset allocation shifts that have been taking place," Khurana said.The shift to bonds from stocks is a normal occurrence as people get older and move to protect their wealth after years of accumulation. However, other commentators have noted that as boomers reposition en masse, they risk shocking the market and prompting bouts of volatility as they sell down their stock holdings. Also, given that they don't have as long of a time horizon as younger investors, boomers <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/recession-economy-outlook-us-stock-market-ownership-old-americans-retirement-2024-1?utm_source=twitter&amp;utm_medium=social&amp;utm_campaign=markets-sf">may be prone to panic selling</a> in a downturn, exacerbating market losses as they look to minimize their own downside. Khurana said he pegs the odds of a recession in the next two to three years as higher than 50%. That's in line with the outlook from New York Fed economists, with <a target="_blank" class="" href="https://www.newyorkfed.org/medialibrary/media/research/capital_markets/Prob_Rec.pdf">central bankers pricing in a 61% chance the economy could tip into recession</a> within the next 12 months, per their latest projection."If asset prices, even if they fall from very high levels — even if they fall, call it 10% — then I think that psychologically really matters," he said. "And you can see them cut back on their spending and [if] the savings rate rises, which would push the economy into recession in that world."<h2 id="1f4f9b0a-8c69-484f-bba5-c8635495ad04">The biggest spenders</h2>What's bad news for boomers is bad news for the economy, given how much economic growth has <a target="_blank" class="" href="https://www.businessinsider.com/baby-boomers-spending-net-worth-us-economy-recession-2023-10">relied on their spending down their $75 trillion nest egg </a>in recent years. The demographic spends <a target="_blank" class="" href="https://www.epsilon.com/us/insights/resources/cross-generational-marketing">around $548 billion a year</a>, more than any other generation, according to a report from marketing research firm Epsilon. Meanwhile, they tucked away the least savings among any generation last year, with the average boomer putting away just $4,059 in 2023, according to a <a target="_blank" href="https://www.notion.so/the-new-inflationary-era-is-here-105f0f4b6661808b9a01e833849e5366?pvs=21">report</a> from the insurance firm New York Life.Their spending is fueled by the tremendous amount of wealth the generation is holding on to, Khurana says. Boomers were sitting on $78.5 trillion in the first quarter of this year, or the equivalent of 52% of the entire net worth of the US, according to <a target="_blank" class="" href="https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/">Federal Reserve</a> data.<div type="image" title="US wealth by generation graph" height="800" width="1200" msid="113552817" hostid="261" sizebytes="27562"></div>The generation has become exceedingly wealthy because it's holding onto the largest share of all real estate and stocks in the country, which have ballooned in value over the last five years. Broken down by each generation's holdings of property and stocks, boomers accounted for 42% of all real estate ownership and 54% of all corporate equity and mutual fund ownership. <div type="image" title="Real estate ownership by generation" height="800" width="1200" msid="113552819" hostid="261" sizebytes="28306"></div><div type="image" title="Corporate equities and mutual fund shares by generation" height="800" width="1200" msid="113552820" hostid="261" sizebytes="32312"></div>"What I think is happening is that, because asset prices are up, they feel very comfortable spending very aggressively," Khurana said. "There's no question that I think they have certainly fared better in this environment than other generations have."Yet, the gains they've enjoyed in the stock and housing market have also put boomers in a precarious position, with the group most at risk of wealth destruction if home or stock prices were to drop.Housing and equity prices marched to record highs in the years since the pandemic, but commentators, including Khurana, think a <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/yen-carry-trade-stock-market-crash-jobs-report-recession-yardeni-2024-9?_gl=1*34ds0l*_ga*OTI1ODIwOTQ2LjE3MTYzOTg2NjU.*_ga_E21CV80ZCZ*MTcyNjc2Mzc2My4zNTkuMS4xNzI2NzY0NjU1LjM3LjAuMA..">correction</a> in <a target="_blank" class="" href="https://www.businessinsider.com/real-estate-home-prices-correction-housing-market-buying-a-house-2024-7">both markets</a> could be imminent. <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-crash-recession-indicators-labor-market-rate-cuts-hussman-2024-8">John Hussman</a>, one of the market's most bearish forecasters, estimated that stocks could have as much as 70% downside. According to one indicator tracked by his firm, the market looks to be the <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-1929-prediction-sp500-outlook-overvalued-john-hussman-2024-3">most overvalued since 1929</a>, he said in a recent note. <a target="_blank" class="" href="https://www.businessinsider.com/us-cities-where-home-prices-are-falling-the-most-2024-6">Home prices, meanwhile, are already starting to drop</a> in key metros that boomed during the pandemic, like cities in Florida and Texas. <a target="_blank" class="" href="https://www.businessinsider.com/housing-market-home-prices-falling-buying-a-home-outlook-supply-2024-9">Home price cuts jumped</a> to their highest level in over 5 years in August, according to a Realtor.com report.That's not to say boomers will cause the next recession, but the risk during a recession is dialed up under the current paradigm, Khurana said."I think it's an increase in the savings rate caused by a decline in asset prices is a risk that is not on people's radar and is definitely something that could cause the recession. And I think the probability of that is certainly higher than many people think in the next five years, or two to three years, to be honest."

Baby boomers have a ton of their wealth tied up in stocks and housing. Here's why that's a risk to the economy. 

<ul class="summary-list"><li>Polls show that the economy is the most important issue in the election.</li><li>President Joe Biden has a good record, but Americans are still angry over high prices.</li></ul>No issue looms larger for the 2024 election than <a target="_blank" href="https://www.businessinsider.com/what-us-economy-would-look-like-with-trump-biden-presidency-2024-5">the economy.</a>A May ABC News-Ipsos poll found that nearly 9 in 10 Americans said that either the economy generally or "inflation, meaning raising prices" was the most important issue in determining their vote for this November.<a target="_blank" href="https://www.businessinsider.com/how-to-vote-ukraine-top-issue-2024-candidate-guide">Russia's invasion of Ukraine</a> is Europe's largest conflict since WWII. Illegal border crossings are at their highest level on record. The Supreme Court's reversal of Roe triggered a major shift in <a target="_blank" href="https://www.businessinsider.com/how-to-vote-abortion-top-issue-2024-biden-trump-guide">abortion</a> politics. And yes, a former president, Donald Trump, has been found guilty on felony charges. Despite all of that, political strategist James Carville's axiom "It's the economy stupid" may still hold.In a traditional election, Biden wouldn't be feeling too much pressure. Unemployment remains low. <a target="_blank" href="https://www.businessinsider.com/high-prices-inflation-sticking-interest-rate-hikes-stock-market-2024-5">Inflation</a> has cooled, but prices remain high. Wall Street has hit new records. But voters consistently say they aren't feeling it. One economist coined the term "<a target="_blank" href="https://www.businessinsider.com/soft-landing-economy-us-on-track-data-cooling-interest-rates-2024-6">vibecession</a>" to describe the disconnect between the solid fundamentals and the downright dour outlook.Here's a look at each candidate's stance on the issue<h2 id="5df8ea51-d58d-45e5-b1d5-0f7db7bc2a38">Where Joe Biden stands on the economy</h2>Biden is proud of his economic record. Many of the core metrics illustrate there's reason for him to be. Unemployment has remained under 4% for the longest stretch since the 1960s. More than 15 million jobs have been created since he took office. The US economy is expected to grow at double the rate of its G7 peers, according to the International Monetary Fund. Trump loved touting new Wall Street records; under Biden, <a target="_blank" href="https://markets.businessinsider.com/news/stocks/dow-40000-what-does-hitting-the-major-milestone-mean-for-investors-1033400640">the Dow hit over 40,000</a> for the first time.Americans aren't feeling it. Inflation has cooled, but prices on everything from eggs to gas remain high. In 2022, food costs accounted for the highest percentage of household income since the 1990s, according to the Department of Agriculture. Even home repairs are costlier now than ever before. Biden has pressured companies to cut prices, but the Federal Reserve has far more power to address inflation than presidents. And the central bank typically only cuts rates when faced with the possibility of a recession or the confidence that a rate cut wouldn't exacerbate inflation. Neither condition exists.The president has outlined an agenda that could help address some pressures. In his 2023 State of the Union, Biden called on Congress to pass tax credits for middle-class home buyers. He also wants existing homeowners who have held off on buying bigger homes to receive $10,000 if they sell a starter home below the median price in their area.Biden's 2025 budget proposal also outlines other potential policies he could pursue if he wins reelection, though he would need Democrats to retake the House. The president proposed hiking the corporate tax rate to 28%; billion-dollar companies would also face a higher corporate minimum tax. Biden also wants a 25% tax on the wealthiest Americans' unrealized income. Taxing the rich would help cut the deficit by $3 trillion over the next decade, according to the White House's estimates.<h2 id="5a790d33-5d23-4496-a40f-d8993fcbfc53">Where Donald Trump stands on the economy</h2>Trump has not yet provided many specifics on what he would do with a second term. Polls show that voters view his presidency much more favorably now. Trump has repeatedly pointed out that inflation was far lower (under 2% on average) during his time in office. Some of the stock market and unemployment records that were set under Trump pre-COVID-19 have been surpassed by Biden.Economists fear that some of Trump's ideas could actually make inflation worse.He wants a crackdown on illegal immigration, which matches the sentiment that the issue has gotten out of control under Biden's watch. But such actions could worsen labor shortages.The self-described "Tariff Man" wants to impose a 10% tariff on all imported goods and even higher tariffs on some Chinese products. Trump has falsely argued that foreign countries bear the costs. In actuality, US importers are forced to pay the additional costs, and studies show that sometimes, that is passed on to consumers.Trump's allies are also looking at ways to expand on his assault against the Federal Reserve and its chairman Jerome Powell. Trump appointed Powell to lead the central bank, but soured on him. Like all presidents, Trump wanted lower interest rates to juice borrowing. Unlike his recent predecessors, Trump applied significant pressure on the Fed, undermining its prized political independence. The central bank is mandated to keep inflation low, which requires raising the benchmark interest rate. According to The Wall Street Journal, Trump's allies are considering policies that would give a president greater say over the Fed's moves.The former president also wants Congress to renew his signature tax plan that passed without Democrats' support. Conservatives often argue that tax cuts and deregulation fuel economic growth. At times. of higher inflation, such cuts can actually raise prices. As NPR previously reported, there's no perfect relationship between cutting taxes and economic growth. Trump has also proposed working with Congress to end the taxation of tips.

How the economy will change under Trump vs Biden

<ul class="summary-list"><li>Immigration provides a huge boost to the economy, according to Paul Krugman.</li><li>Claims that immigrants are taking jobs from Americans aren't supported by facts, he said.</li></ul>Immigration isn't taking jobs away from Americans — and it's actually great for the US economy, according to Nobel laureate Paul Krugman.In an op-ed for The <a target="_blank" class="" href="https://www.nytimes.com/2024/07/23/opinion/immigration-unemployment-inflation.html">New York Times</a>, the top economist pointed to economic arguments against immigration, with former President <a target="_blank" class="" href="https://www.businessinsider.com/immigration-border-security-biden-trump-2024-election">Trump claiming that immigrants</a> have been taking job gains away from native-born Americans in recent years.However, Krugman said the data don't support that argument, as the unemployment rate for <a target="_blank" href="https://fred.stlouisfed.org/series/LNU04073413">US-born workers</a> has remained near a historical low of 4.3%, according to Federal Reserve data.<div type="image" title="Graph showing unemployment rate among native-born American workers" height="450" width="538" msid="111994541" hostid="261" sizebytes="8034"></div>The labor force participation rate among native-born workers has been on the decline, but among prime-age native-born workers, the labor force participation rate has actually been rising, Fed data shows. That's a solid sign that the stagnation among US workers is largely because of the <a target="_blank" class="" href="https://www.businessinsider.com/how-retirement-of-peak-boomers-could-affect-economy-social-security-2024-4">wave of boomers retiring</a>, Krugman said."So the near stagnation of native-born employment isn't a demand-side issue, in which people aren't working because they can't find jobs. It is instead a supply-side issue, in which people aren't working because they've reached retirement age. We've been able to achieve large increases in overall employment only because working-age immigrants have been coming to America. If we didn't have the <a target="_blank" class="" href="https://www.businessinsider.com/immigrants-boost-us-economy-housing-shortage-hurts-growth-nyc-2024-5">immigrants</a>, we wouldn't have the jobs," Krugman wrote.There's also evidence that immigration has helped push wages up, as immigrants do not ultimately compete with US workers for the same jobs. <a target="_blank" href="https://www.businessinsider.com/wages-outpace-inflation-consumer-sentiment-high-prices-2024-7">Wages among all workers have shot up 25%</a> since 2020, around the time the employment of foreign-born workers in the US began rising.<div type="image" title="Graph showing employment of foreign-born workers" height="450" width="538" msid="111994542" hostid="261" sizebytes="10672"></div>Immigration could also be helping the Fed keep a lid on inflation, Krugman said."Immigrants expand supply, but they also contribute to demand. In the aftermath of the pandemic, however, the huge sums spent on aid pumped up demand; this burst of demand was easier to accommodate without sustained inflation because immigration made it possible to achieve rapid growth in employment," he added.Other <a target="_blank" class="" href="https://www.businessinsider.com/immigration-us-economic-outlook-americans-worker-labor-impact-paul-krugman-2024-3">economists</a> and <a target="_blank" class="" href="https://www.businessinsider.com/immigration-us-economy-outlook-impact-gdp-growth-labor-force-market-2024-3">strategists</a> on Wall Street have said <a target="_blank" class="" href="https://www.businessinsider.com/us-economy-outlook-ai-immigration-rich-people-will-prevent-recession-2024-7">immigration could end up being a big boost to the economy</a>. Rising immigration could help the US grow another $7 trillion over the next 10 years, according to a recent projection from the <a target="_blank" class="" href="https://archive.is/Q6f1n/again?url=https://www.nytimes.com/2024/06/24/business/commercial-real-estate-loans.html">Congressional Budget Office</a>."So, no, immigrants aren't taking our jobs. Everything that happens in the economy hurts someone: There are no doubt some places where immigrants have driven up housing costs, or where native-born Americans or legal immigrants have faced increased job competition. But the scare stories don't match the facts," Krugman said.

Why immigration is boosting the US economy, according to Nobel economist Paul Krugman

<ul class="summary-list"><li>India's stock market is poised to more than double in value to $10 trillion by 2030, Jefferies says.</li><li>Jefferies analysts also predicted the Indian economy would surpass Japan's and Germany's by 2027.</li></ul>India's stock market is poised to skyrocket, more than doubling in value to $10 trillion by 2030, thanks to the country's surging economy and persistent reforms, analysts at Jefferies wrote in a note published Thursday.With a value of $4.3 trillion, India's equity market is the world's fifth-largest, and Indian stocks have managed to consistently yield 10% annual returns over a 20-year period.Even after that run of stunning equity returns, the Jefferies analysts said investors in the country's stock market could still expect returns of 8% to 10% in the next five to seven years."Assuming market returns in line with the last 15-20 year history and new listings, India will become nearly a U$10trn market by 2030 - impossible for large global investors to ignore," the analysts wrote.India <a href="https://www.businessinsider.com/india-china-economy-emerging-stock-markets-xi-jinping-narendra-modi-2024-2">has emerged as a hot spot</a> for global capital inflows in recent years, especially as its longtime rival China struggles to keep investors from fleeing economic turmoil in the country.China's flailing economy, its <a href="https://markets.businessinsider.com/news/stocks/china-stock-market-crash-rescue-plan-ban-selling-support-measures-2024-2?_gl=1*nyfnkq*_ga*MTIzMDA5Njk4OS4xNzA3ODc2NDgz*_ga_E21CV80ZCZ*MTcwODYyMTgxMC4yNi4xLjE3MDg2MjIzMjQuNTMuMC4w">cratering stock market</a>, and a never-ending property crisis have driven foreign investors to shift their focus to India, helping push the country's stock market 31% higher last year.Meanwhile, India's financial-system reforms, favorable geopolitical dynamics, a growing entrepreneurial landscape, and the country's emphasis on services exports are all boosting its prospects for strong growth and stock-market returns. India's gross domestic product has seen a 7% compound annual growth rate in the past decade."Over the next 4 years, India's GDP will likely touch US$5trn making it the 3rd largest economy by 2027, overtaking Japan and Germany, being the fastest growing large economy with the tailwinds of demographics (consistent labor supply), improving institutional strength and improvement in Governance," the note said.Correction: February 23, 2024 — An earlier version of this story misstated the year by which Jefferies analysts expect the Indian stock market to reach $10 trillion in value. It's 2030, not 2023.

India's stock market will soar to $10 trillion by 2030 and the country's growth is impossible for investors to ignore, Jefferies says

In a rather dampened <keyword id="19915531" type="General" weightage="20" keywordseo="forecast" source="keywords">forecast</keyword> for the Indian economy, <keyword id="19908266" type="General" weightage="20" keywordseo="ICRA" source="keywords" meta.keywordsubtype="org" meta.entityname="ICRA" meta.hostid="261" meta.entityid="ICRA">ICRA</keyword> has forecast a sharp <keyword id="20637625" type="General" weightage="20" keywordseo="slowdown" source="keywords">slowdown</keyword> in India's <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword>. The credit rating agency has projected a year-on-year expansion of 6.0% in <keyword id="22106354" type="General" weightage="20" keywordseo="Q1-FY2025" source="keywords">Q1 FY2025</keyword> — the lowest in the last six quarters. In Q4 FY2024, India recorded an impressive 7.8%. The Reserve Bank of India had expected the growth momentum to continue this financial year as well. Earlier this month, the RBI governor had projected a 7.1% growth in Q1, while the growth rate for the entire financial year FY2024-25 was projected to be at 7.2%. The central bank had attributed this potential robust growth to improved agricultural activity, sustained buoyancy in services activity, healthy balance sheets of banks and corporates, thrust on capex by the government, visible signs of pick up in private investment, and improving prospects of global trade. However, RBI’s growth projections for this financial year were slightly moderated due to lower-than-anticipated corporate profitability, general government expenditure, and core industries output. As per ICRA, the sharp drop in GDP growth is primarily due to parliamentary elections and a contraction in government capital expenditure weakening urban consumer confidence. Another main cause could be the weakening urban consumer confidence, which reported a surprising downtick in the May and July 2024 rounds of the Central Bank’s Consumer Confidence Survey. “The lingering impact of last year’s unfavourable monsoon and an uneven start to the 2024 monsoon prevented a broader improvement in rural sentiment. Lower volume growth combined with diminishing gains from commodity prices weighed upon the profitability of some of the industrial sectors. The heat wave also affected footfalls in various service sectors, even as it provided a significant boost to electricity demand,” said Aditi Nayar, Chief Economist at ICRA. Despite the Q1 slowdown, ICRA expects economic activity to pick up in the latter half of FY2025, projecting an overall GDP growth of 6.8% for the full year, with a potential to exceed 7% in the second half. The agency expects decelerated growth in Gross Value Added (GVA) as well, easing to 5.7% in Q1 FY2025 from 6.3% in the previous quarter. This slowdown is primarily attributed to a decline in industrial growth, which is predicted to moderate to 6.4% from 8.4%, along with slight reductions in the services sector's growth and a modest improvement in agricultural GVA. The difference between GDP and GVA growth is expected to narrow to around 30 basis points (bps) in Q1 FY2025, down from 148 bps in the previous quarter, due to lower growth in net indirect taxes amid a rise in government subsidies. ICRA's analysis indicates that industrial GVA growth is likely to moderate in Q1 FY2025, with a slowdown in manufacturing and construction offset by growth in electricity, mining, and quarrying. Additionally, a contraction in government and state capital expenditure, along with a significant drop in new project announcements, has contributed to the overall slowdown. Manufacturing profit margins have also been under pressure due to rising global commodity prices and narrowing deflation in input costs, which, combined with slower growth in manufacturing output, suggests a deceleration in manufacturing GVA growth. In the agricultural sector, GVA growth is projected to be modest at 1.0% in Q1 FY2025, amidst declining output from most rabi and summer crops and a deficient rainfall in June 2024. With growing concerns around inflation and unemployment in India and across the world, the latest forecast could further fuel the fears around recession and slowdown in major economies. However, a much clearer picture will emerge with the actual quarterly estimates of GDP for Q1 from the National Statistical Office (NSO) next week. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/digital-initiatives-to-triple-indian-retail-borrowing-to-usd-2-5-trillion-by-2030-sp-global/articleshow/112263945.cms" data-type="tilCustomLink" target="_blank">Digital initiatives to triple Indian retail borrowing to USD 2.5 trillion by 2030: S&amp;P Global</a>

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