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<ul class="summary-list"><li>US real GDP grew at an annualized rate of 2.8% in the third quarter of this year, less than the forecast.</li><li>This means the economy is still growing healthily — even if it was weaker than expected.</li></ul>In the third quarter, US economic growth fell short of expectations but remained strong.A news release from the Bureau of Economic Analysis said real gross domestic product rose at an annualized rate of 2.8% in the third quarter of the year, less than the <a target="_blank" class="" href="https://www.investing.com/economic-calendar/gdp-375">forecast</a> of 3%."The increase in real GDP primarily reflected increases in consumer spending, exports, and federal government spending," the news release said. Consumer spending was a particular highlight, with personal consumption expenditures growing at a strong 3.7% annualized rate.Real GDP rose at an annualized rate of 1.6% in the first quarter and 3% in the second quarter.The weaker-than-expected GDP growth doesn't necessarily mean the US is heading toward a recession. There's still a lot of strength in the economy. Layoffs remain low and inflation-adjusted wage and income growth are back to their strong pre-pandemic trends.The presidential election is less than a week away, and <a target="_blank" class="" href="https://www.businessinsider.com/what-is-going-on-with-economy-jobs-inflation-election-voting-2024-10">the economy is top of mind for voters</a>. Additionally, the Federal Reserve will announce its next interest-rate decision on November 7. The Fed has several recent data releases, in addition to the upcoming jobs report on Friday, to help it determine whether or how much it will cut rates. Before the GDP report, <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">traders</a> expected the central bank would cut rates by 25 basis points in November. That was still the case after the report, with a probability of around 96%.The US economy has generally been strong since recovering from the 2020 Covid recession, and the new GDP reading adds to this. David Kelly, chief global strategist at J.P. Morgan Asset Management, said in a note that "in an economy that has averaged 2.1% growth since the start of this century," adding that anything between 2.5% and 4% "shows a continuation of above-trend real growth."Wednesday's reading is the advance estimate based on early data collected by the Commerce Department, so it could change as more information rolls in. Hurricane Helene in September and Hurricane Milton in October affecting businesses could impact GDP in the third or fourth quarter; it may mean larger revisions upward or downward.Mark Hamrick, a senior economic analyst at Bankrate, told Business Insider earlier this month that because economic data will likely be "foggy" because of issues like strikes and recent hurricanes, "we may have to employ a little bit of patience to get through the end of the year and hope for better visibility about economic data."This is a developing story. Please check back for updates.

US economic growth came in slightly under expectations but consumer spending remains strong

<ul class="summary-list"><li>Europe could take a hit to GDP in a second Trump presidency, Goldman Sachs analysts say.</li><li>They point to increased uncertainty as the scope of the timing of Trump's sweeping tariffs remains unclear.</li></ul>As the world takes in the results of the US presidential election, regions around the world are determining what a Trump presidency might mean for their economies.Europe could face a big hit to economic growth as trade tensions increase, Goldman Sachs analysts said. The analysts downgraded their growth forecasts across the region, down to 0.8% from their previous forecast of 1.1% for 2025. In 2026, the analysts said they expect growth of 1%, down from 1.1% and lower than the consensus estimate of versus 1.4%. Overall, the analysts expect the Euro area to take a 0.5% hit to real GDP, with the bulk of the downturn set to materialize next year.The analysts point to renewed trade tensions fueled by Trump's proposal for sweeping tariffs on all US imports.More significant than the actual tariff increases, though, will be the trade policy uncertainty that comes with them, the analysts say. That uncertainty will pose a bigger hit to growth than the tariffs themselves, they said. "The actual magnitude of tariff increases might matter less than the uncertainty created by threatening to impose tariffs on Europe," the analysts said in a Wednesday note, adding, "The magnitude of the tariff increase, however, is unlikely to be clear for some time, and so we expect a pronounced further increase in TPU in the baseline scenario."The firm's trade policy uncertainty indicator for Europe has already risen in recent weeks as markets increasingly priced in odds of a Trump win.The analysts acknowledged, though, that while Trump's 10% across-the-board tariff is a clear risk, they expect his administration to initiate a more moderate set of duties on European countries.Those tariffs will likely target auto exports, which are worth $80 billion, or 0.9% of EU exports, the analysts said. The duties will have large impacts to GDP in Germany, Sweden, and Switzerland in particular, they added. During his campaign, Trump proposed raising tariffs on imports from all countries to <a target="_blank" class="" href="https://www.businessinsider.com/trump-tariff-plan-inflation-policy-impact-trade-war-china-rates-2024-5">at least 10%</a>, and said imports from China would be <a target="_blank" rel="" class="" href="https://www.businessinsider.com/donald-trump-impose-tariffs-china-if-elected-2024-2?utm_medium=ingest&amp;utm_source=markets">subject to even steeper 60% duties</a>.The analysts add that a Trump presidency will prompt European countries to up their defense spending to account for a <a target="_blank" href="https://www.businessinsider.com/how-trump-could-handle-ukraine-war-if-reelected-scenarios-2024-10">potential decrease</a> in US military support to Ukraine. That wartime support will cost the EU another 0.5% of GDP every year, the analysts say.The increased spending won't result in a growth boost, either, they say."Any resulting growth boost, however, will likely be limited by modest military spending multipliers in Europe, upward pressure on long-term yields from higher deficits and negative confidence effects from elevated geo-political risk," the analysts said.European officials have long warned of huge growth impacts from a second Trump presidency.Last month, ECB member Joachim Nagel <a target="_blank" href="https://www.businessinsider.com/trump-win-economic-growth-inflation-risks-europe-ecb-germany-2024-10">warned</a> a Trump win could hammer growth and send inflation soaring in Europe, and back in January, ECB president Christine Lagarde said a Trump win is "clearly a threat" to Europe, pointing to his tariff plans, commitment to NATO, and climate change policies.

Trump's presidency will hurt Europe's economic growth amid renewed trade tensions, Goldman Sachs says

India’s Chief Economic Advisor (CEA), <keyword id="20690607" type="General" weightage="20" keywordseo="V-Anantha-Nageswaran" source="keywords">V Anantha Nageswaran</keyword>, remains optimistic about the nation’s economic prospects despite a slower-than-expected <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> in the second quarter of FY2024-25. Speaking at the Bharat @100 Summit hosted by Assocham, he said that the fundamental health of the economy remains robust, according to a report by aNI. Nageswaran highlighted several indicators demonstrating the economy’s resilience. “If you run through the checklist for the <keyword id="19948184" type="General" weightage="100" keywordseo="Indian-economy" source="keywords">Indian economy</keyword>, the health is pretty robust,” he noted, pointing to controlled levels of external debt as a share of GDP, declining non-performing assets in the banking system, and stable inflation trends. Although certain food items have caused inflationary spikes, their impact is limited within the overall consumer price index basket, he explained. The CEA praised the shift in fiscal expenditure priorities over the past seven years, with greater focus on capital investments rather than revenue spending. This reallocation, he suggested, has bolstered long-term economic stability and growth potential. India’s GDP growth for the July-September quarter was 5.4%, significantly below the Reserve Bank of India’s forecast of 7%. While this has sparked concerns among economists, Nageswaran urged against overreacting. Erratic monsoons and excessive rainfall disrupted economic activity in Q2, he explained, while global uncertainties and supply chain pressures further weighed on growth. Despite these challenges, he maintained confidence in the broader growth narrative, citing improvements in key economic metrics. For instance, India’s gross capital formation has risen from 27.3% of GDP in the second decade of the 2000s to 30.8% today. Private consumption remains steady, and exports—spanning both services and manufacturing—continue to perform well even amid challenging global conditions. Nageswaran also underscored India’s growing competitiveness in international trade. He noted that the nation’s total <keyword id="24325087" type="General" weightage="20" keywordseo="exports-as-a-percentage-of-GDP" source="keywords">exports as a percentage of GDP</keyword> now surpass China’s, showcasing its resilience and adaptability in a shifting global trade environment. However, he cautioned against reading too much into quarterly fluctuations, highlighting the impact of geopolitical developments such as trade restrictions from the US on critical minerals and rare earths, as well as policy shifts in China. These external factors, he suggested, are likely to persist and may continue influencing short-term economic trends. (with ANI inputs)

Indian economy is resilient despite Q2 challenges, says CEA Nageswaran

<ul class="summary-list"><li>Texas' economy is growing faster than California's as it woos big companies and new residents.</li><li>While California still has the highest GDP in the US, Texas is close behind.</li></ul>California may boast the <a target="_blank" class="" href="https://www.businessinsider.com/california-economy-ranks-5th-in-the-world-beating-the-uk-2018-5">top economy</a> in the country, but Texas is close on its heels.Since 2020, big-name companies and hundreds of thousands of residents have ditched California for Texas, and the Lone Star State's economic growth has surpassed that of its coastal counterpart.California's economy, while still on the up and up, has grown "relatively slowly" in recent years, according to an October 2024 <a target="_blank" class="" href="https://www.ppic.org/publication/californias-economy/?utm_source=ppic&amp;utm_medium=email&amp;utm_campaign=epub">fact sheet</a> from the Public Policy Institute of California, averaging an uptick of 2.3% annually from 2020 to 2023. That figure is down from a 3.9% average increase in California's gross domestic product in the prior four years, according to the nonprofit research institute.Meanwhile, Texas has seen its GDP grow at a rate of 3.9% since 2020, according to the Public Policy Institute. That figure is even stronger for the fourth quarter of 2023, which saw Texas' GDP grow at an annual rate of 5% — a jump that Texas Gov. Greg Abbott <a target="_blank" class="" href="https://gov.texas.gov/news/post/texas-economy-again-expands-faster-than-nation#:~:text=%E2%80%9CTexas%20is%20again%20outpacing%20the,America%2C%E2%80%9D%20said%20Governor%20Abbott.">attributed</a> to the state being "the best business climate" in the country.The margins between the behemoths are close and growing closer. California's economy ranks 5th internationally, per the report. Its $3.9 trillion GDP accounts for 14% of the national GDP, according to the report. But Texas isn't far behind, comprising 9% of the country's total economy and coming in eighth internationally, according to <a target="_blank" class="" href="https://www.bea.gov/news/2024/gross-domestic-product-state-and-personal-income-state-4th-quarter-2023-and-preliminary">data</a> released by the Bureau of Economic Analysis earlier this year.California and Texas, which rank first and second in US population, respectively, have both seen their economies grow faster than the nation's overall economy in the last quarter-century. Since 1998, the US economy has increased 75%, while California's has jumped 111%, according to the Public Policy Institute of California.But Texas has them both beat with growth of 128% over that same time period, per the fact sheet.<h2 id="9e346c45-d5ad-41de-84b8-ba0fb92f4093">Texas has wooed major money-makers</h2>Texas' speedy financial growth comes as the state has increasingly <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-moving-spacex-x-texas-headquarters-california-law-2024-7">marketed itself as a corporate haven</a> for businesses and an economic refuge for people seeking a more affordable cost of living.Many of the businesses and people who have flocked to Texas come directly from California.A wave of large companies, including <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-wants-move-spacex-x-headquarters-texas-tesla-california-2024-7">Tesla</a>, Charles Schwab, and Oracle, have ditched The Golden State for Texas in recent years. <a target="_blank" class="" href="https://www.businessinsider.com/texas-company-headquarters-hq-tesla-chevron-charles-schwab-california-economy-2024-8">Chevron</a>, which had been in California since 1879, is the latest business to leave for Texas after California sued the company last year over fossil fuel risks.Gov. Abbott welcomed Chevron to the state last month with a clear message: "Drill baby drill," he tweeted.Corporate fans of Texas, chief among them billionaire Elon Musk, say the <a target="_blank" class="" href="https://www.businessinsider.com/moving-to-texas-because-california-regulations-too-tough-on-business-2024-2">state offers lower taxes and less regulation</a>. The Tesla CEO moved the company's HQ from Palo Alto, California, to Austin in 2021.Since then, several major corporations have followed suit. As of 2024, Texas is <a target="_blank" class="" href="https://www.visualcapitalist.com/map-the-number-of-fortune-500-companies-in-each-u-s-state/">home</a> to 52 Fortune 500 companies, according to <a target="_blank" class="" href="https://fortune.com/ranking/fortune500/search/?statename=California">Fortune</a>.While California still has Texas beat with 55 Fortune 500 companies based in the state, including tech giants like Apple, Alphabet, Meta, and Nvidia, the state's lead is growing ever thinner. According to CBRE, a global real estate company that itself moved from California to Texas in 2020, <a target="_blank" class="" href="https://www.cbre.com/insights/local-response/the-shifting-landscape-of-headquarters-change-among-the-fortune-500">found</a> that eight Fortune 500 companies left California from 2018 to 2023, seven of which moved to Texas.<h2 id="baf0885e-765f-4f23-b1e6-69005786fc91">Some Texas residents are less happy</h2>As Texas' economy soars, some residents are feeling <a target="_blank" class="" href="https://www.businessinsider.com/texas-housing-market-home-prices-falling-austin-dallas-moving-trends-2024-10">increasingly fed up and priced out.</a>Hundreds of thousands of Americans <a target="_blank" class="" href="https://www.businessinsider.com/moved-california-to-texas-will-never-go-back-expensive-2023-5">flocked to Texas</a> in the years since the COVID-19 pandemic began, many seeking cheaper living and <a target="_blank" class="" href="https://www.businessinsider.com/conservative-moved-california-to-texas-back-orange-county-dallas-2024-7">pandemic and political freedoms</a>. Between 2021 and 2022, the state gained 668,000 new residents, according to the US Census Bureau <a target="_blank" class="" href="https://www.census.gov/data/tables/time-series/demo/geographic-mobility/state-to-state-migration.html">data</a>.During that same period, however, <a target="_blank" class="" href="https://www.businessinsider.com/leaving-texas-political-freedom-property-taxes-housing-costs-2023-11">Texas also lost nearly half a million people</a>, per census data.Some people <a target="_blank" class="" href="https://www.businessinsider.com/california-moved-texas-homeless-want-to-go-back-2024-9">who left California for Texas</a> in recent years ended up returning to the Golden State, telling BI that the <a target="_blank" class="" href="https://www.businessinsider.com/couple-moved-california-texas-back-santa-cruz-rosenberg-2023-11">intense weather</a> and <a target="_blank" class="" href="https://www.businessinsider.com/leaving-texas-political-freedom-property-taxes-housing-costs-2023-11">politics</a> in Texas were too much for them. Others told Business Insider they were dismayed to discover that the <a target="_blank" class="" href="https://www.businessinsider.com/moved-california-to-texas-not-cheap-politics-2024-8">cost of living in Texas </a>didn't meet their expectations.In the Dallas, Fort Worth, and Arlington areas, consumer prices have jumped 25% over the last five years, <a target="_blank" class="" href="https://fred.stlouisfed.org/series/CUURA316SA0">according</a> to the Bureau of Labor Statistics.The state's big cities have primarily been the site of these small-scale exoduses, Business Insider's Jennifer Sor previously reported. Dallas has seen a slight population decline over recent years, losing about 5,000 people from mid-2020 to mid-2023, according to <a target="_blank" class="" href="https://www.census.gov/data/tables/time-series/demo/popest/2020s-total-cities-and-towns.html">census data. </a>Meanwhile, <a target="_blank" class="" href="https://www.businessinsider.com/austin-home-prices-falling-texas-mortgage-rates-housing-crisis-success-2024-9">Austin</a> ranks as the fifth most moved-out-of city in the US year to date, according to a May <a target="_blank" class="" href="https://www.pods.com/blog/moving-trends">analysis</a> from moving firm PODS.Texas realtors also told BI that the <a target="_blank" class="" href="https://www.businessinsider.com/home-prices-falling-florida-texas-us-housing-market-pandemic-boomtowns-2024-10">housing market has cooled</a> amid less demand. Median home prices, meanwhile, have fallen about 7% from the mid-2022 highs, according to <a target="_blank" class="" href="https://www.redfin.com/state/Texas/housing-market">data</a> from Redfin previously <a target="_blank" class="" href="https://www.businessinsider.com/texas-housing-market-home-prices-falling-austin-dallas-moving-trends-2024-10">cited</a> by BI.

California's economic growth is slipping behind Texas as the Lone Star state draws corporate HQs and people 

<ul class="summary-list"><li>Hurricane Milton is battering Florida days after Hurricane Helene wreaked havoc on several states.</li><li>Tropical storms are becoming more frequent, powerful, and costly.</li></ul>Hurricane Milton is <a target="_blank" class="" href="https://www.businessinsider.com/hurricane-milton-landfall-florida-housing-market-insurance-fema-2024-10">pummeling</a> Florida days after Hurricane Helene <a target="_blank" class="" href="https://www.businessinsider.com/before-after-satellite-photos-hurricane-helene-destruction-florida-2024-10">battered several states</a> including North Carolina, causing widespread destruction and more than 220 deaths.The two events are the latest sign that hurricanes are becoming more frequent, more ferocious, and more costly. They're also hitting employment and <a target="_blank" class="" href="https://www.businessinsider.com/dockworker-strike-hurricane-helene-israel-palestine-iran-supply-chains-inflation-2024-10">economic growth</a>, at least in the short term."Hurricanes are the most costly weather and climate extreme event to impact the US historically, in terms of total dollars and average cost per event," Adam Smith, a climate scientist at the National Oceanic and Atmospheric Administration (NOAA), told Business Insider.The US has experienced 363 billion-dollar weather disasters costing a total of $2.6 trillion between 1980 and August 2023, NOAA data shows. Hurricanes accounted for $1.3 trillion or about half the total cost, an average of $22.8 billion per storm.The number of hurricanes striking the mainland US has also jumped from 12 between 1961 and 1970 and between 1971 and 1980, to 18 between 2001 and 2010, and 19 between 2011 and 2020, per NOAA data.Helene has caused an <a target="_blank" class="" href="https://www.businessinsider.com/analysts-estimate-up-to-34-billion-damage-from-hurricane-helene-2024-10">estimated $34 billion</a> worth of destruction, and Milton threatens to deal tens of billions of dollars in damage too, Jefferies analysts said in a note this week.<a target="_blank" class="" href="https://www.businessinsider.com/hurricane-harvey-katrina-comparison-2017-8">Hurricane Harvey</a> in 2017 and <a target="_blank" class="" href="https://www.businessinsider.com/hurricane-ian-estimated-cost-compare-most-expensive-us-storms-ever-2022-10">Hurricane Ian</a> in 2022 cost an estimated $159 billion and $119 billion each, ranking behind only Hurricane Katrina's $200 billion toll in 2005.Hurricanes are becoming more costly because the amount and value of <a target="_blank" class="" href="https://www.businessinsider.com/hurricane-milton-category-four-storm-real-estate-market-insurance-damages-2024-10">assets exposed and vulnerable</a> to storm damage has increased, Smith said.He also said that <a target="_blank" class="" href="https://www.businessinsider.com/climate-change-hurricanes-why-storms-are-wetter-stronger-slower-2019-7">climate change</a> — higher ocean surface temperatures fuel stronger hurricanes, and warmer air carries more rain — has led to more rainfall, a greater risk of storm surges, and a higher chance of rapid intensification.The most severe storms have become more intense with about a 10% rise in maximum sustained winds on average, leading to a "roughly 33% increase in destructive potential," Michael Mann, a climate expert at the University of Pennsylvania, told BI.<h2 id="77eeb913-dcd7-49c3-a311-7df4b503d8e4">Economic impacts</h2>Before Milton made landfall, analysts at Oxford Economics said in a note that about 2.8% of US GDP was in its direct path. They estimated that a Category 5 storm could lower fourth-quarter annualized GDP growth by 0.14 percentage points, from a forecasted 2.3% to below 2.2%. Milton was downgraded to Category 3 before striking Florida."For Milton, tourism, trade and transportation will be hit," Ryan Sweet, Oxford's chief US economist, told BI.Helene is already poised to <a target="_blank" class="" href="https://www.businessinsider.com/global-economy-israel-iran-war-oil-growth-inflation-hurricane-china-2024-10">reduce nonfarm payrolls</a> for October by 40,000 to 50,000 jobs, and Milton could deal a further blow to employment, he said. Job growth was trending at 167,000 a month, but that number could end up being under 100,000 this month in light of the <a target="_blank" class="" href="https://www.businessinsider.com/boeing-strike-costing-50m-per-day-as-negotiations-restart-2024-10">Boeing strikes</a> and Helene, even before accounting for Milton, Sweet said.The most economically impactful hurricanes disrupt energy infrastructure like offshore rigs and refineries, driving up national gas prices. They can also hit home sales and housing starts, and extensive flooding can delay the return of people who evacuated affected areas, and hamper rebuilding efforts, Sweet said.New research finds that hurricanes harm human health more than previously thought, exacerbated by climate change fueling more damaging storms. The upshot is "far more death and destruction," Mann told BI.He said hurricanes are causing "more death and disease, which definitely propagates through the economy."<h2 id="0c1a0582-4066-4b34-9f76-0a4a07c6172a">After the storm</h2>Some research suggests the <a target="_blank" class="" href="https://www.businessinsider.com/hurricanes-today-more-damaging-costlier-than-they-were-in-1900-2019-11">economic costs of hurricanes</a> are largely offset by the rebuilding efforts that follow. Repairs following a single hurricane can indirectly support nearly 248,000 jobs, generate over $17 billion of labor income, and contribute more than $30 billion to GDP, according to Implan, an economic data provider.In effect, every dollar spent on hurricane repairs generates another $1.72 in the economy, benefiting sectors ranging from retail and housing to banking and oil refining, Implan said."Rebuilding should provide a boost to economic activity in those affected regions in subsequent months, and potentially years," Sweet told BI, quoting from his recent note. "A <a target="_blank" class="" href="https://www.businessinsider.com/hurricane-milton-category-five-threatens-florida-fema-funding-2024-10">ton of federal and insurance money</a> will flow into the impacted areas, which will boost economic activity."The damage might be offset for now, but whether that will continue with rising temperatures and soaring costs remains uncertain.Eventually, "increasing hurricane damages will exceed the coping capacities" of the US economy, according to a 2022 paper published by the Potsdam Institute for Climate Impact Research.

Hurricanes are becoming more frequent, violent, and costly — plus they're hitting jobs and economic growth

Economists at the country's largest lender, SBI, today said they see India's Q2 real GDP growth slowing down further to 6.5% in the September quarter of this fiscal year. Amid concerns over the country's economic growth rate and whether it is slowing down, the analysts said they expect FY25 growth to come "closer to" 7%. SBI analysts join a long line of agencies like Fitch, ADB, IMF, Moody, World Bank, S&amp;P, and even RBI in forecasting India's GDP growth for FY25 in the range of 6.8% to 7.2% for FY25, driven by robust consumption and investment. SIP inflows have been at an all-time high, and so has QIP (qualified institutional placement) fundraising. As many as 71 companies raised Rs 88,678 crore this year through QIPs. Activity in Indian primary markets also remained robust, with 78 mainboard IPOs in 2024; this is a 111% rise from just 38 listings in FY23. Between April and June 2024, India's real GDP grew by 6.7%, the lowest growth seen in 15 quarters, pushing experts to believe that India is caught in a cycle of slowdown. "There is some incipient pressure evident on the domestic economy. Based on our analysis of 50 meaningful leading indicators (both consumption and demand-centric), a dip looks plausible across select cohorts of agriculture, industry, and services in Q2," the <keyword id="22337294" type="General" weightage="20" keywordseo="SBI-economists" source="keywords">SBI economists</keyword> added. Stating that they track 50 indicators to gauge economic activity, SBIs note said the proportion of indicators showing acceleration declined to 69% in Q2 FY25, as against 80% in Q2 FY24 and 78% in Q1 FY25. However, things might be changing now, given that rural demand has started looking up amidst muted urban demand. SBI also explained that the ongoing regulatory tightening on unsecured lending and roadblocks that are hindering rollover/refinancing of debt through unsecured credit are dismantling the unwarranted exuberance that had built up post-pandemic, especially in the urban areas. Madhu Lunawat, CIO &amp; Fund Manager, Bharat Value Fund states that the overall investment environment remains strong due to favorable economic conditions supporting government policies &amp; reforms. "The sustainable inflow from domestic investors is going to support the Indian equity market in any kind of correction. The long-term bullish structure of Indian economy will continue to attract new domestic &amp; global investors to participate in India’s growth story through various Investment avenues.” <h2>Rate cuts not on cards</h2>RBI Governor Shaktikanta Das clarified today that changing the monetary policy stance to 'neutral' does not mean a rate cut is imminent in the central bank's next policy announcement. Notably, RBI MPC is set to meet between December 4 and 6, 2024, to decide if the prevailing repo rate of 6.5%, which has stayed unchanged for the last 2 years, should be brought down or not. In its last meeting, The <keyword id="20501100" type="General" weightage="20" keywordseo="RBI-monetary-policy" source="keywords">RBI monetary policy</keyword> committee had shifted its stance to 'neutral' indicating that it is open to adjusting interest rates based on economic conditions. "It should not be assumed that we have done this, so therefore the next step is a rate cut. A change in stance doesn't mean that the next step is a rate cut in the very next meeting. It's not so," Das said. Das also cautioned that inflation remains a key factor, and inflation and CPI prints for October are expected to stay high.

SBI economists see Q2 GDP growth slowing down to 6.5%; FY25 growth to be closer to 7%

<ul class="summary-list"><li>Russia's economy is growing but headed for big trouble, researchers wrote in a recent article. </li><li>They pointed to Russia's outsized military spending, which has come at the cost of its private sector.</li></ul>Russia's wartime economic boom is masking much deeper problems, according to a group of researchers.The authors of a recent article, who hail from institutions including the Yale School of Management, the Wharton School, the Carnegie Endowment, and the Kyiv School of Economics, cast a stark warning for Russia's economic situation despite the nation posting strong growth numbers since its invasion of Ukraine in 2022.Russia's economy is expected to <a target="_blank" href="https://www.imf.org/en/Countries/RUS">expand another 2.4% this year</a>, according to figures from the International Monetary Fund. However, much of that growth stems from the Kremlin's wild spending spree, and Russia's economy is hindered by a number of problems that could set it up for trouble in the long run, the researchers said."The reality of Russia's economic situation is far more complex and concerning than some would have you believe. The productive core of the Russian economy has been severely compromised," the group wrote in <a target="_blank" class="" href="https://fortune.com/europe/2024/08/19/an-economic-catastrophe-is-lurking-beneath-russias-gdp-growth-as-putin-throws-everything-into-the-fireplace/">an op-ed for Fortune</a> this week.Russia has been spending heavily on its military and defense sectors, setting a <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-putin-ukraine-war-military-spending-budget-kremlin-inflation-2023-10">record military budget for 2024</a>. But that spending has come at a cost to Russia's private sector, some economists say, with other areas of its economy being slammed by a <a target="_blank" class="" href="https://www.businessinsider.com/russia-lacks-workers-ukraine-war-labor-crisis-worker-shortage-2023-12">severe shortage of workers</a> as resources get funneled into Russia's invasion of Ukraine.Private firms are showing signs they're unable to keep up with <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-war-spending-casualties-manpower-mobilization-labor-shortage-inflation-2024-8">consumer demand</a>. That imbalance has caused <a target="_blank" class="" href="https://www.businessinsider.com/russia-war-economy-boosts-wages-salaries-beat-inflation-labor-crunch-2024-2">wages</a> and <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-inflation-outlook-ukraine-war-gas-prices-oil-sales-2024-7">inflation</a> to spiral in the nation, prompting central bankers in Russia to <a target="_blank" class="" href="https://www.reuters.com/markets/rates-bonds/russian-central-bank-hikes-rates-by-200-bps-18-highest-more-than-two-years-2024-07-26/#:~:text=MOSCOW%2C%20July%2026%20(Reuters),an%20overheated%20economy%20come%20down.">hike interest rates to 18% in July.</a>"Simply put, Putin's administration has prioritized military production over all else in the economy, at substantial cost," the researchers wrote. Higher borrowing costs could spell trouble for Russian consumers, who are increasingly burdened by debt. <a target="_blank" class="" href="https://www.ceicdata.com/en/indicator/russia/household-debt--of-nominal-gdp">Household debt</a> accounted for 20% of Russia's total GDP at the end of the first quarter, according to CEIC data. Higher interest rates, in that backdrop, could set the nation up for a "looming crisis," the researchers added.Meanwhile, Russia's finances aren't squaring, partly because the nation is taking in less money from its <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/russian-energy-revenue-crude-oil-prices-gas-exports-sanctions-ukraine-2024-1">oil and gas trade. </a>The nation is running a 2% budget deficit — which is "significant" by Russia's standards, the researchers added. "In conclusion, the apparent resilience of the Russian economy is largely illusory, built on a precarious foundation of unsustainable government spending and short-term market factors," the researchers wrote. "A looming economic catastrophe driven by the fundamental flaws in Russia's current strategy will likely set the stage for severe long-term consequences that will play out in the years ahead," they added.Experts have warned of a dire future for Russia as it drags its economy through a third year of war. On the extreme end, forecasters are calling for the nation to <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-collapse-recession-moscow-ukraine-war-us-dollar-energy-2024-7">enter a severe recession</a>, with most experts agreeing that the nation has <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-real-situation-economist-ukraine-war-sanctions-growth-inflation-2023-11">poor prospects for long-term growth</a>.

Russia's economic growth is masking a looming 'economic catastrophe,' researchers say

India's services sector showed robust expansion in October, per the <keyword id="22267674" type="General" weightage="20" keywordseo="HSBC-India-Services-PMI" source="keywords">HSBC India Services PMI</keyword> (Purchasing Managers' Index), which rose to 58.5 last month, up from September's ten-month low of 57.7. October's figures managed to exceed even the long-run PMI average of 54.1, largely on the back of a strong sales pipeline and elevated demand. Employment, or job creation in this sector accelerated to its fastest growth rate in 26 months. Anticipating solid, sustained demand in the near term, firms added new employees at the most rapid pace in over 2 years. October also saw <keyword id="23834175" type="General" weightage="20" keywordseo="input-costs-rise" source="keywords">input costs rise</keyword> at their fastest pace in 3 months, indicating renewed demand and economic activity in the country. The ISM Services PMI, an indicator of the economic health of the US, also exceeded expectations, reaching 56.0 compared to the forecasted 53.8, suggesting strong growth within the services sector. "During October, the Indian services sector experienced strong expansions in output and consumer demand, as well as job creation, which achieved a 26-month high," said Pranjul Bhandari, Chief India Economist at HSBC. The sector saw increased business activity across multiple fronts, with export sales showing significant growth and companies reporting stronger demand from international markets including Africa, Asia, the Americas, the Middle East, and the UK. However, industry experts remain cautiously optimistic about the sector's prospects. Suman Chowdhury, Chief Economist at Acuité Ratings &amp; Research, noted that while the October recovery is promising, several factors warrant careful monitoring. “The recovery in the PMI indices in October 2024 is promising for the second half of the fiscal after the dip in several high-frequency indicators in September 2024. Industrial and service activity has expectedly received a boost from the anticipated spike in consumption demand in Q3 FY25, driven by the festivities and the marriage season," she said. Chowdhury added that it will be crucial to monitor the sustainability of these PMI indices at these elevated levels, given the reported weakness in urban demand in Q2 as flagged by FMCG companies. She also noted that potential increases in wholesale and core retail inflation, combined with higher input costs and wage pressures, could delay expected interest rate cuts. RBI governor Shaktikanta Das also noted that inflation and CPI figures for October might be elevated, pushing ahead any chances of interest rate cuts in the near future. Acuité Ratings &amp; Research maintains its GDP growth forecast at 7.0% for FY25 while acknowledging the multiple downside risks that will require close observation in the coming months.

India's Services Index jumps to 58.5 in October as employment grows the fastest in 26 months

India could see a shift in foreign direct investment (FDI) trends in the second term of Donald Trump (Trump 2.0) as President of the United States, says a research report by the State Bank of India. The report highlighted that under his first term, Trump 1.0, the Trump administration made sweeping regulatory changes aimed at attracting investments back to the U.S., which impacted FDI inflows globally, including India. It added that if similar policies are reintroduced in Trump 2.0 also, it could create challenges for emerging markets like India, which rely on FDI as a significant driver of economic growth. Notably, a recent Kotak report highlighted that a complete Republican control over all arms of the US government would mean increased US earnings via corporate tax cuts, higher tariffs on imports into the US and greater US fiscal deficits. The first two could spell doom for emerging markets like India and China, since foreign investors will make a beeline for investing more money in the US markets, which will come at the cost of intense selloff in emerging markets. However, higher fiscal deficits will eventually lead to the dollar weakening after the initial euphoria dies down. "India may see shifts in foreign direct investments (FDIs) during Trump 2.0. The Trump 1.0 administration saw significant regulatory changes aimed at attracting investments back to the US," the SBI report stated. However, given that India has been gradually diversifying its sources of FDI (foreign direct investments), this trend could serve as a buffer against any potential decline. Moreover, domestic institutional investors have been stepping up big time, maintaining some balance to the massive exodus of FIIs over the past month. So far in November 2024, FIIs have withdrawn Rs 19,849 crores from the cash segment in Indian markets, while DIIs have poured in Rs 14,014.18 crores as of November 10th, 2024. "India is no longer dependent on the traditional sources of FDI inflows... unlike the recent past, FDI is now coming in many new sectors," noted the SBI report. Unlike a decade ago, when most FDI inflows came from a limited number of traditional sectors, India is now attracting investment in a wide array of industries, including renewable energy, sea transport, medical devices, and surgical appliances. Data suggests over the last 24 years, i.e., between April 2000 and June 2024, FDIs have poured in $1,013.4 billion in the Indian economy. Out of this, 67%, i.e., $689.88 billion, has come in just the last 10 years. The report added there are up to 12 emerging sectors showing strong FDI interest, which could help offset any loss of inflows in conventional sectors if there is a shift in global investment patterns under another Trump administration. In the last financial year, the top 5 sectors that have received the highest quantum of FDI inflow include the services sector (finance, banking, insurance, and business) which makes up about 16% of the inflows. This is followed computer software &amp; hardware, which constitute around 15% of total FDI flows. Trading and telecommunications follows with a share of 6% each, and Automobile Industry comes next with a 5% share. In the short term, the potential for increased U.S. tariffs, more restrictive H-1B visa policies, and a stronger dollar could bring some volatility to India's trade and investment landscape. However, in the long term, these challenges might also encourage India to expand its manufacturing capabilities, diversify export markets, and focus on becoming economically more self-reliant. Notably, India has maintained a merchandise trade surplus with the U.S. despite tariffs imposed during Trump's first term. This indicates that Indian exports have remained resilient, and there is potential to strengthen this trade relationship further by capitalizing on emerging sectors and reducing dependency on traditional industries. Suman Chowdhury, Executive Director &amp; Chief Economist, Acuité Ratings &amp; Research Limited cautions that in the medium to long term, the trade relationship with the US may see a structural improvement. "Higher tariff and trade restrictions in the US with China should translate into better opportunities for exports of manufactured goods from India", he adds.

FDIs may shift to US under Trump 2.0 but it is unlikely to severely impact FDIs inflow to India, says SBI Report

India's GDP growth is projected at 7.2 per cent in 2024-25, around 7 per cent in the next fiscal, and after that, there is a strong likelihood that the growth will revert to the 8 per cent trend, said <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> deputy governor <keyword id="20244361" type="General" weightage="20" keywordseo="Michael-Debabrata-Patra" source="keywords">Michael Debabrata Patra</keyword>. He was speaking at the New York Fed Central Banking Seminar organised by the <keyword id="20238413" type="General" weightage="20" keywordseo="Federal-Reserve-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="Federal Reserve Bank" meta.hostid="261" meta.entityid="Federal Reserve Bank">Federal Reserve Bank</keyword> here on Monday. "...I do believe with all the strength of my conviction that India's time has come," he said, and highlighted the country heads into its future with the youngest population in the world with a median age of 28 years. Unlike in many parts of the world, the working age population is growing -- every sixth working age person is an Indian. Patra said that since independence in 1947, India's growth path has undergone three structural shifts with trend growth, having risen to 7 per cent during 2002-2019. After the severe contraction during the pandemic, a new growth trajectory averaging 8 per cent seems to be forming during 2021-24, he said. India is now regarded as the fastest growing major economy in the world. Already the fifth largest economy in terms of market exchange rates, it is poised to become the third largest economy by 2030, the senior RBI official said and added the country is already the third largest economy in terms of <keyword id="20776921" type="General" weightage="20" keywordseo="purchasing-power-parity" source="keywords">purchasing power parity</keyword>. "Our projections show that India's <keyword id="21013593" type="General" weightage="20" keywordseo="real-GDP-growth" source="keywords">real GDP growth</keyword> will be 7.2 per cent in 2024-25 and around 7.0 per cent in 2025-26 in a cyclical correction to the rebound from the pandemic. Thereafter, there is a strong likelihood that India's growth will revert to the 8 per cent trend," Patra said. On inflation, he said it is projected to average 4.5 per cent in 2024-25 and 4.1 per cent in 2025-26. Consumer Price Index (CPI) based inflation fell below target during July-August but rose to 5.5 per cent in September on the back of a pickup in price momentum in some food items and adverse base effects inherent in year-on-year measurement. "Our projection indicates that these price pressures will persist in October and November before headline inflation realigns with the target from December 2024 and remains aligned in 2025-26," the deputy governor said. He also emphasised that India is emerging as a world leader in leveraging <keyword id="20181895" type="General" weightage="20" keywordseo="digital-technologies" source="keywords">digital technologies</keyword> for transformative change.

India likely to grow at 7.2% in FY25, says RBI deputy governor

No one's going to sound an alarm, blast out a text message, or shoot you an email about it, but the US economy is undergoing a historic shift. We are leaving one long period of expansion — what economists refer to as a "supercycle" — and entering a very different one.Over the past 15 years, the economy has been characterized by weak demand and low interest rates — a decade-and-a-half hangover from the Great Recession. Now, experts tell me, that is coming to an end. The world has changed, and we are entering an era of higher growth, creeping inflation, and geopolitical instability that will reroute the flow of money around the world. A new era has arrived, but it's going to be bumpy.The good news is that this new era looks as if it will be unencumbered by some of the problems that put a ceiling on growth during the previous era. The most salient feature of the old period, economists say, was the risk of deflation — the possibility that a lack of demand would cause wages and prices to spiral downward, a trap that is <a target="_blank" href="https://www.businessinsider.com/inflation-economy-deflation-unemployment-job-market-recession-outlook-paul-krugman-2024-7">extremely difficult to escape</a>. In an effort to avoid that fate, policymakers in Washington pushed interest rates down to zero and encouraged <a target="_blank" href="https://www.businessinsider.com/softbank-crashing-investments-uber-wework-monopoly-failure-2019-11">all kinds</a> of <a target="_blank" href="https://www.businessinsider.com/charlatans-show-up-when-wall-street-stock-market-gets-weird-2021-3">risky</a> <a target="_blank" href="https://www.businessinsider.com/twilight-of-tech-gods-recession-stock-market-crash-silicon-valley-2022-5">behavior</a> <a target="_blank" href="https://www.businessinsider.com/bill-ackmans-big-pharma-trade-is-making-wall-street-a-super-awkward-place-2014-10">among</a> investors, businesses, and everyday consumers. Investors trying to reach their benchmarks "had to creep out on the risk spectrum," Josh Hirt, a senior economist at Vanguard, tells me. "Supercheap debt," he says, made it easy for businesses to "overexpand and overhire."The pro-risk environment had some earth-shifting consequences. Silicon Valley put the internet on our phones, China blew a massive bubble in its property market, and the world started investing in renewable energy. But low interest rates did little to boost demand, and the economy consistently grew slower than it did before the crash, never notching above 3% GDP growth. It was only after the massive government stimulus, spurred by the pandemic, that the economy reached escape velocity, pushing up wages and starting to grow at a healthy clip.Now, economists say, we're entering a supercycle that will be characterized by three sweeping forces. First, higher interest rates will reward savers, making it more expensive to take risks. Second, geopolitical and economic volatility will generate inflationary effects, reintroducing the specter of soaring prices. And third, industrial planning will be increasingly influenced by national-security concerns, altering supply chains across industries. How low interest rates wind up settling will establish a new gravitational pull in global markets, recalibrating the forces that determine where the economy is most likely to grow — and where investment is most likely to flow.The new supercycle "puts the economy in a completely new era," says Silas Myers, the CEO of Mar Vista Investments, which oversees $4 billion in assets. He warns that an entire generation of investors, lenders, and entrepreneurs have failed to embrace the "profound impact" that the new economic era will have on their businesses."We were in a time that was less demanding and more forgiving," Myers says. "But that time is ending."One of the clearest signs that a new economic supercycle has arrived is when the financial rules go topsy-turvy. The previous supercycle was ushered in when the Federal Reserve, in response to the destruction caused by the financial crisis, cut its benchmark interest rate to 0% — the first time the central bank went all the way to the bottom.The structural shift sent shockwaves throughout the world. Yields on Treasury bonds tanked, meaning investors had to start taking some serious risks if they wanted to make money. This new adventurism pushed stocks higher and higher. Capital went flying into China and other emerging markets in record amounts — some $1 trillion in 2010 alone. Venture capitalists sank billions into companies like Juicero and <a target="_blank" href="https://www.businessinsider.com/wework-adam-neumann-apartment-startup-investment-silicon-valley-vc-apocalypse-2022-8">WeWork</a> that had no viable plan to turn a profit. And with interest rates so low, companies could suddenly load up on debt: From 2007 to 2017, global nonfinancial corporate debt doubled, to $66 trillion. Until the pandemic hit, inflation and wage growth both remained below 3.9%. The world had changed. Now, with the arrival of a new supercycle, money managers are once again being forced to adapt to a changing set of economic realities. Normally, when the Fed hikes interest rates rapidly, the stock market tanks. But that's no longer true. From 2022 to 2024, as the benchmark federal funds rate shot up to 5.5% from 0.5%, the Nasdaq 100 and the S&amp;P 500 soared by 23% and 22%. Higher interest rates also failed to spur widespread layoffs or crater the economy. <a target="_blank" href="https://www.businessinsider.com/jobs-report-labor-market-hiring-layoffs-quits-recession-sahm-rule-2024-8">Unemployment has stayed below 4.3%</a>, and GDP growth has remained solid, <a target="_blank" href="https://www.businessinsider.com/gdp-gross-domestic-product-second-quarter-2024-us-economy-2024-7">defying fears of a recession</a>. In short, something has scrambled the natural interactions of the marketplace. It's as if you put your hand over a hot stove and your fingers turned ice cold.One explanation for the economy's topsy-turvy behavior is a change in what economists call the neutral interest rate — the optimal point for encouraging growth without triggering inflation. After the financial crisis in 2008, the economy was so weak that the neutral rate went to zero to encourage money to flow more freely. But now the market's weird nature may be signaling that the neutral rate has risen above the Fed's ideal target of 2%. That would explain why the Fed's higher rates are no longer putting the brakes on growth. Fueled by the post-pandemic government stimulus, the economy's baseline has shifted. Over at Vanguard, Hirt and his colleagues predict that the neutral rate will stay higher for the foreseeable future, eventually settling at about 3.5%."Even if we do dip below 3.5%, the Fed will be anchored at that higher rate," Hirt says. "If the economy were to experience weakness and we have to cut rates, we still don't think that means taking rates back to zero."Unless you're a boomer, you've probably never experienced a world with this high a neutral rate. It changes the nature of risk, which changes what people decide to do with money on micro and macro levels. If you can get a decent return parking your money in ultrasafe government debt, why risk investing it in a startup or stomach the stock market's volatility? This isn't to say no one will be out here taking risks with their cash — it will just flow in different directions. That's because consumers are in a better place now than they were in the era that emerged after the Great Recession.The economy is "an extraordinarily diverse and dynamic animal," Joe Quinlan, the chief market strategist at Bank of America, assured clients in a recent note. It's "a $28 trillion hydra-headed behemoth that beats to the tune of many different sectors." As the Fed's higher rates were putting a strain on rate-sensitive sectors like housing — which makes up 16% of the economy — Big Tech and travel-starved households were spending money fast and loose. The experience showed that overall consumption can continue to rise even when significant swaths of the economy are struggling.So what can we expect from the new economic supercycle? Like every cycle, it will have its upsides and downsides. Rising interest rates will make loans more expensive, forcing businesses to make more-thoughtful decisions about debt. But they'll also boost savings accounts and interest income. In addition, a faster-growing economy will tighten the labor market, empowering workers to continue to fight for a larger slice of the pie. Since 2019, the bottom 10% of earners have seen a wage increase of 13%.Shifting away from the "grow at all costs" mindset of the previous supercycle has also incentivized governments — especially in the developed world — to do more to police markets and protect consumers. Whether it's capping the price of drugs or enforcing antitrust rules more aggressively, polls suggest Americans want to see <a target="_blank" href="https://prospect.org/economy/2024-08-27-polling-voters-action-corporate-power/">more limits</a> on <a target="_blank" href="https://today.yougov.com/economy/articles/47798-most-americans-oppose-monopolies-and-support-antitrust-laws">corporate power</a> and <a target="_blank" href="https://www.pewresearch.org/short-reads/2021/07/20/56-of-americans-support-more-regulation-of-major-technology-companies/">more regulation</a> to safeguard citizens. For the first time in years, the Federal Trade Commission has begun going after pharmaceutical middlemen, opposing mergers between grocery giants, and taking big swings at Big Tech.The new supercycle will also have profound consequences worldwide, upending how and where money is most likely to flow. In China, the debt bubble that formed in the property sector during the previous cycle is sucking cash away from <a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-stimulus-plan-wall-street-stock-market-economy-2024-9">businesses and households</a>, undermining China's bid to become the world's leading economic superpower. And with Europe growing more slowly than the US, foreign investors are steering more of their money to America. In the second quarter of this year, foreign investors owned $8.2 trillion worth of US Treasury bonds, up by 7.3% from a year earlier. Foreign investment is also soaring in US corporate bonds (up by 9.8%) and US equities (up by 23%). Quinlan says he expects the US economy to continue outperforming the rest of the world, given the fiscal and demographic challenges facing the European Union, Japan, and China. In an era of increasing instability, when former sources of growth are flailing, the United States is widely viewed as the safest place to find returns."Not lost on investors is the fact that the US economy remains among the most competitive, innovative, and resilient in the world," Quinlan wrote in a recent note to investors. "Aerospace or agriculture, energy or entertainment, transportation or technology, goods or services — pick any sector or activity, and there's a good chance the US leads the rest of the world. All of this has helped fuel demand among foreign investors for US securities of all stripes." America's economic diversification is also expected to give it a leg up in one of the most volatile features of the new era: trade conflict. The US and China are already battling for control over critical industries like <a target="_blank" href="https://www.businessinsider.com/china-xi-jiinping-future-tech-global-economy-semiconductors-military-failing-2022-9">semiconductors</a>, <a target="_blank" href="https://www.businessinsider.com/china-crushing-us-america-battle-energy-evs-batteries-tech-war-2023-5">batteries</a>, and <a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-crush-tesla-elon-musk-american-ev-industry-2024-2">electric cars</a> — and the tit for tat will be especially costly for less diversified economies. Germany's dependence on manufacturing, for example, places its most essential industries on a collision course with China's ambitions. And while the United States is well positioned to weather the storm, that doesn't mean it won't be rough. The world has never faced a challenge like the skyrocketing flow of exports from China up and down the value chain. It's a dynamic that threatens to imbalance international trade by flooding the market with cheap goods of all kinds. <a target="_blank" href="https://www.businessinsider.com/china-shock-explainer-us-economy-trade-dumping-supply-glut-yellen-2024-4">China Shock 2.0</a> "will not go down easily," Quinlan tells me.For over a decade we have become accustomed to the economy working a certain way — if this, then that. As a new supercycle emerges, investors, businesses, and governments that structured themselves around the old model may experience acute shocks. To succeed in this unfamiliar new world, they'll have to adjust their expectations and find ways to harness the supercycle's opportunities. It's the economic equivalent of natural selection: As the economy evolves, those who adapt will be most likely to survive. The days of economic growth are back. The future belongs to those who can grow with it.<a target="_blank" rel="" href="https://www.businessinsider.com/author/linette-lopez">Linette Lopez</a> is a senior correspondent at Business Insider.

America is entering a new 'economic supercycle'

<ul class="summary-list"><li>According to Hurun's 2024 rich list, China lost 432 billionaires since the high of 1,185 in 2021.</li><li>It's a reflection of China's struggling economy and a government crackdown on the superrich.</li></ul>The number of China's billionaires has dropped by a third since 2021, according to an annual rich list.There were fewer dollar billionaires as difficulties for China's economy and government crackdowns took their toll, <a target="_blank" href="https://www.hurun.net/en-us/rank/hsrankdetails?pagetype=rich">the Hurun Research Institute said.</a>Hurun, a private research group that has tracked Chinese billionaires since 1999, said the total peaked in 2021 with 1,185 billionaires, a figure which fell to 753, a decline of 432, or 36% of the total.It comes as some of China's superrich choose to lie low or leave the country, finding covert ways to take their money with them.<h2 id="4b530a5d-4714-4288-bffd-c77cf18006cc">An old guard departs</h2>Older tycoons — often real estate — are giving way to a new cohort propelled by tech, energy, and e-commerce.Topping the Hurun list this year was <a target="_blank" href="https://www.businessinsider.com/tiktok-billionaire-zhang-yiming-net-worth-lifestyle-2019-11">Zhang Yiming</a>, the founder of TikTok owner Bytedance, with a fortune of $49.3 billion.ByteDance's global revenue grew 30% last year to $110 billion, with users in the US of its TikTok app closing in on 200 million. ByteDance operates a separate app, Douyin, for Chinese users.Yiming replaced <a target="_blank" href="https://www.businessinsider.com/asias-richest-man-zhong-shanshan-lifestyle-wealth-2021-1">Zhong Shanshan</a>, who fell to second place with a fortune of $47.9 billion. His worth declined 24%, the biggest drop of the year at $15.5 billion."The stories of the individuals on the Hurun China Rich List tell the story of the Chinese economy," said Rupert Hoogewerf, Hurun's Chairman and Chief Researcher."The likes of Robin Zeng of lithium battery maker CATL wasn't even on the list 10 years ago, neither was Li Zhenguo of solar panel maker Longi.""Most new faces this year came from Taiwan, which has enjoyed a relatively strong stock market, underpinned by its semiconductor industry," he said.Hoogewerf told Business Insider that the list only included people who were "born and bred, or started out and live in Greater China" up to a minimum age of 18, regardless of their current citizenship. <h2 id="bf71b05f-7223-409f-80f8-b31d7d85d3d0">A reflection of China's economy</h2>China's economy has been grappling with a prolonged housing crisis, high unemployment, high local government debt, and weak consumer demand. Those headwinds hit its superrich, too.Earlier this month, <a target="_blank" href="https://www.businessinsider.com/china-economy-3q-gdp-growth-stock-market-stimulus-2024-10">China released third-quarter growth data</a> that was its slowest in six quarters. The government is promising stimulus measures to boost economic growth and has plans to approve more than $1.4 trillion in extra debt in the next few years, according to <a target="_blank" class="" href="https://www.reuters.com/world/china/reaction-reuters-report-chinas-stimulus-plans-2024-10-29/">Reuters.</a>"With property prices falling and the economy generally tightening, it's not a big surprise the numbers of super-wealthy are falling in China," Kerry Brown, Professor of Chinese Politics at King's College London told BI."And people now don't want to draw attention to themselves while the government is laying stress on equity and greater balance."<h2 id="312e409a-c716-40ff-abfc-180d4446813d">An exodus of the superwealthy</h2>Chinese billionaires are also feeling <a target="_blank" href="https://www.businessinsider.com/china-regulate-excessive-wealth-common-prosperity-2021-8">Xi Jinping's push for a "common prosperity</a>," which was widely viewed as a call for billionaires to share their wealth.That led, among other things, to regulatory crackdowns on tech platform companies and campaigns against China's rich entrepreneurs.Some of China's superrich have also experienced political backlash for making statements perceived as against Xi, including <a target="_blank" href="https://www.businessinsider.com/jack-ma-teacher-alibaba-tech-titan-high-tech-farmer-agriculture-2023-12">Jack Ma, the founder of Alibaba and Ant Group and once the invincible poster boy of Chinese tech.</a>He <a target="_blank" href="https://www.businessinsider.com/jack-ma-not-missing-alibaba-china-2021-1">disappeared from public view</a> in 2020 after facing <a target="_blank" href="https://www.businessinsider.com/what-happened-ant-group-ipo-jack-ma-alipay-2020-11">action from Chinese regulators</a> that resulted in an antitrust investigation, a suspended IPO, and the loss of $12 billion in personal fortune within a few months."Other superrich individuals may have taken such high-profile cases as good reason to preempt possible trouble by moving out of China," Brown wrote in an article for <a target="_blank" href="https://theconversation.com/why-its-becoming-harder-to-get-super-rich-in-china-239774">The Conversation</a>.While this may not be reflected in the Hurun rich list, China is on track to see a record exodus of 15,200 high-net-worth individuals in 2024, according to a report by investment migration firm <a target="_blank" class="" href="https://www.henleyglobal.com/newsroom/press-releases/henley-private-wealth-migration-report-2024">Henley &amp; Partners.</a>High-net-worth individuals were classed as those with liquid investable wealth of $1 million or more.<h2 id="1c4d9b70-83c2-414a-ac76-1fb8ea05653b">Getting money out of China</h2>Individuals can wire no more than $50,000 a year overseas, which can be problematic for wealthy citizens who want to leave.According to a <a target="_blank" rel="noopener nofollow" href="https://www.bloomberg.com/news/articles/2023-10-08/how-china-s-rich-are-using-underground-networks-to-move-their-money-abroad?srnd=premium">Bloomberg</a> report last year, some ultra-rich Chinese citizens have been finding unusual, sometimes illegal, ways to move money in response.The report said that funds can move through an <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/china-economy-wealthy-investors-markets-rich-cash-banks-secret-transfer-2023-10">informal, underground banking system known as "hawala."</a> Those caught are typically fined 30% or more of the total amount that they had attempted to move."These agencies have sprouted to meet soaring demand," Joel Gallo, an adjunct professor of finance at New York University Shanghai, told Bloomberg. "They act as quasi-banking firms, yet operate without the scrutiny of one and adroitly engage in regulatory arbitrage by standing in a gray zone.Others are using virtual private networks to export their wealth in the form of crypto, which has been banned in China since 2021.<a target="_blank" class="" href="https://www.reuters.com/technology/bruised-by-stock-market-chinese-rush-into-banned-bitcoin-2024-01-25/">Reuters</a> reported that one finance executive used bank cards from small commercial banks to buy cryptocurrencies through gray-market dealers. He then capped each transaction at $6,978 to avoid alerting regulators.Brown, the expert at King's College London, said the loss of wealth in China shouldn't be overstated."It is still OK to be rich in China, if a bit less so than in the past. But it's probably more advisable to be low profile and very loyal in public to the Communist party — and to get rich working in high-tech sectors that the government favors."

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