1. GENERAL OUTLOOK:
Global real GDP is forecasted to grow by 2.7 percent in 2023, down from 3.3 percent in
2022. We expect further slowing to 2.4 percent in 2024. Economic growth is moderating
under the weight of still high inflation and monetary policy tightening. Rather than a
global recession, we expect a relatively subdued economic outlook. Growth is generally
strongest in emerging Asian economies, and weakest in Europe and the US.
Rapid monetary policy tightening over the last year or so led to weakening in global
housing, bank lending, and the industrial sector. However, this weakness has been more
than offset by strength in other sectors, most notably service-sector activities, which is
visible in labor markets. Strong consumer spending and the fading impact of shocks of
recent years have been difficult to assess, leading to ongoing forecast revisions.
Nonetheless, recent data point to moderation of these positive trends, leading to slower
global growth in the second half of 2023 and early 2024.
Global Economy
Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent
in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in
the April 2023 World Economic Outlook (WEO), it remains weak by historical standards. The
rise in central bank policy rates to fight inflation continues to weigh on economic
activity. Global headline inflation is expected to fall from 8.7 percent in 2022 to 6.8
percent in 2023 and 5.2 percent in 2024. Underlying (core) inflation is projected to
decline more gradually, and forecasts for inflation in 2024 have been revised upward.
The recent resolution of the US debt ceiling standoff and, earlier this year, strong
action by authorities to contain turbulence in US and Swiss banking reduced the immediate
risks of financial sector turmoil. This moderated adverse risks to the outlook. However,
the balance of risks to global growth remains tilted to the downside. Inflation could
remain high and even rise if further shocks occur, including those from an intensification
of the war in Ukraine and extreme weather-related events, triggering more restrictive
monetary policy. Financial sector turbulence could resume as markets adjust to further
policy tightening by central banks. Chinas recovery could slow, in part as a result of
unresolved real estate problems, with negative cross-border spillovers. Sovereign debt
distress could spread to a wider group of economies. On the upside, inflation could fall
faster than expected, reducing the need for tight monetary policy, and domestic demand
could again prove more resilient.
In most economies, the priority remains achieving sustained disinflation while ensuring
financial stability. Therefore, central banks should remain focused on restoring price
stability and strengthen financial supervision and risk monitoring. Should market strains
materialize, countries should provide liquidity promptly while mitigating the possibility
of moral hazard. They should also build fiscal buffers, with the composition of fiscal
adjustment ensuring targeted support for the most vulnerable. Improvements to the supply
side of the economy would facilitate fiscal consolidation and a smoother decline of
inflation toward target levels.
Indian Economy
This year began with the anticipation that runaway inflation, aggressive policy rate
hikes, and high commodity prices might topple a few major economies into recession in
2023. We are halfway past 2023 and, while the world is still in the woods, the probability
of a recession this year has trimmed. Labor markets in several advanced countries remain
tight, while the largest economy, the United States, is seeing a rebound in consumer
confidence and spending. Risk spreads are declining on both sides of the Atlantic after
the recent banking crisis in the United States.
India, meanwhile, enjoys a Goldilocks moment as it sees its economic activity gaining
momentum amid continuing global uncertainties. The last quarters GDP data was pleasantly
surprising but not completely unexpected. The GDP growth in the fourth quarter has pushed
up the full-year GDP growth of FY2022-23 to 7.2%, 200 basis points (bps) higher than the
earlier estimate. The recently released Annual Economic Review for the month of May 2023
highlighted that the postpandemic quarterly trajectories of consumption and investment
have crossed prepandemic levels.1
Evidently, economists and analysts are bullish about the Indian economy. Our growth
forecasts for FY2023-24 remain similar to our April forecast, although
higher-than-expected growth in FY2022-23 has raised our base for comparison. That said, we
have raised our lower limit of the range given the buoyancy of the economy. We expect
India to grow between 6% and 6.3% in FY2023-24 and have a stronger outlook thereafter. In
fact, if global uncertainties recede, we expect growth to surpass 7% over the next two
years.
There are multiple downside risks to our forecasts, but we find the uncertainties
around the actions of the central banks of major economies and the oil price movements
this past quarter particularly interesting. In this edition, we highlight the significance
of these developments and their future implications for India.
India grew by 6.1% in the last quarter, which is approximately ~100 bps higher than
what the market had anticipated.2 While the overall growth was broad-based, many sectors
such as construction and agriculture experienced more-than-expected growth. In fact,
strong growth in manufacturing proved to be a reassuring development as modest growth in
the sector in previous quarters had been a concern for policymakers.
On the expenditure side, exports performed well despite global headwinds, while imports
recorded their slowest growth since December 2020, primarily because of easing crude oil
prices bringing down Indias import bills. Private consumption, the largest component of
Indias final demand, with a modest growth of 7.5% in FY2022-23,3 emerged as the weakest
link in overall growth. The share of private consumption in GDP fell in the last quarter
and was the lowest in the past seven quarters, dragged down by weak rural demand. However,
things might be changing on that front as well.
Urban demand conditions have remained resilient, as evidenced by the sales of mid- to
high-end segments of automobiles, the number of UPI transactions, and domestic air
passenger traffic data.4 Rural demand, which was lagging, has also been rising lately, as
seen in the sales of tractors, IIP nondurable goods, and Mahatma Gandhi National Rural
Employment Guarantee Act data.5
Overall, the first-quarter data of FY2024 instils confidence in the improving health of
the economy. Inflation in the first quarter was 4.5%, the lowest since the quarter of
September 2019. Goods and Services Tax collections remain strong, suggesting that revenue
buoyancy will aid in improving the budgeted fiscal deficit ratio to GDP. At the same time,
Indias external account has been improving, thanks to the falling import bills as oil
prices ease.
Interestingly, the credit-deposit ratio has continued to improve strongly from the lows
of the pandemic despite the rising interest rates (figure 1). A deeper dive reveals that
most of the lending is happening in the industry and services sector.6 This points to
improving investment, which means that the supply side is gearing up to meet the rising
demand.
2. REAL ESTATE MARKET:
The real estate industry is moving beyond what it perceives as cyclical headwinds
— i.e., rising interest rates, declining gross domestic product (GDP), sinking deal
flows — and taking a long-term approach to real estate assets. The mood among the
real estate professionals we interviewed for this years Emerging Trends is cautious
optimism. Their plan: Ride out the current slump and reposition their firms for another
period of sustained growth and strong returns.
We find it striking that so many people in the industry are willing to look beyond
cyclical headwinds. As one real estate professional told us, "Well look back in 10
years, and the prices that seem astronomical today will seem like a bargain."
This years Emerging Trends also reconfirms two sometimes contradictory property market
trends: Aspects of the industry are "normalizing" (reverting to pre-COVID
patterns), while others appear to have permanently changed as the pandemic has altered how
and where we use different types of properties. These patterns are playing out in how real
estate professionals view prospects in the 80 markets we tracked. No matter the trends, we
believe companies must be flexible and adapt quickly to market changes.
3. OPPORTUNITY AND CHALLENGES
(a) Opportunities
As India awaits policy reforms to pick up speed, your Company firmly believes that the
demand for Real Estate in a country like India should remain strong in the medium to long
term. Your Companys well accepted brand, contemporary architecture, well designed
projects in strategic locations, strong balance sheet and stable financial performance
even in testing times make it a preferred choice for customers and shareholders. Your
Company is ideally placed to further strengthen its development potential by acquiring new
land parcels.
(b) Challenges
While the management of your Company is confident of creating and exploiting the
opportunities, it also finds the following challenges:
• Unanticipated delays in project approvals;
• Availability of accomplished and trained labour force;
• Concerns due to ongoing pandemic situation;
• Increased cost of manpower;
• Rising cost of construction lead by increase in commodity prices;
• Growth in auxiliary infrastructure facilities; and
• Over regulated environment.
4. BUSINESS OVERVIEW:
Our Companys business activities may be classified as follows:
Trading in real estate by way of acquiring interests in various real estate projects
such as flats, land and commercial offices.
5. PRESENCE IN CERTAIN AREAS OF MUMBAI SUBURBS:
A substantial amount of our business activities are concentrated in certain areas of
Mumbai suburbs such as Mira Road and Naigaon. We believe that we have good knowledge of
the environment in these areas which assist us in identifying opportunities. Our Company
believes that these areas are having tremendous growth potential since the said areas are
still to be developed and are an attractive real estate market in terms of returns on
investment and depth of demand for real estate developments.
6. CONTINUED FOCUS IN REAL ESTATE ACTIVITIES:
We intend to continue our focus in the real estate activities. We believe that the
areas where we have focused our real estate activities are an attractive market in terms
of return of investment and depth of demand for real estate developments.
7. FOCUS IN NEW AREAS:
Although, we have historically focused our business activities in Mumbai suburbs such
as Mira Road and Naigaon. We are in process of establishing our presence in other areas of
Mumbai suburbs.
8. TO CONTINUE EXPANDING OUR BUSINESS BY INCLUDING NEW SERVICES:
We intend to explore opportunities to expand our operations by developing new verticals
within our existing lines of business. Further expanding our offerings will help us to
build on existing diversification of our business.
|
For and on behalf of the Board of Directors |
|
|
Diggi Multitrade Limited |
|
Sd/- |
Sd/- |
|
Anilkumar Pannalal Patni |
Sangeeta Hariprasad Naidu |
| Date: 05.09.2023 |
Managing Director |
Director& CFO |
| Place: Mumbai |
DIN: 06597013 |
DIN: 0748443 |
+91-9892691696
