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An Economic Overview

The Global Economy: The world GDP grew by 2.8% in 2022 compared to 6.1% in 2021. While this may appear as a huge slide, the reality is quite the opposite.

Global headwinds: In FY23, global economic activity experienced a broad-based slowdown beyond anticipation owing to a number of factors. Globally, energy costs increased due to geopolitical tensions and supply-side disruptions distorted consumer prices. As a result, most economies faced very high inflation with the global average being around 9% and consequently central banks hiked interest rates to restore price stability, which led to fewer investments.

However, inflation is being tamed in most countries and the IMF anticipates global headline inflation to fall from 8.7% in 2022 to 7%in 2023 and 4.9% in 2024. It also anticipates core inflation to decline slowly and most countries to reach their inflation targets by 2025.

The World Bank expects investment growth in emerging markets and developing economies to remain below its average rate of the past two decades. The IMF has also laid stress on multilateral cooperation between countries for fast-tracking the process of global green-energy-transition and preventing fragmentation owing to geopolitical tensions.

The IMF anticipates that any further adverse shocks could impede global progress. Well-concerted global and national level efforts are necessary to mitigate the risks of global recession and debt distress in EMDEs and to support a major increase in EMDE investment.

There are, however, chances of a faster-than-expected recovery of the global economy due to reduced inflation, structural reforms by governments, an increase in overall demand and the reopening of China. The overall scenario calls for cautious optimism

The Indian Economy: India emerged as one of the fastest-growing major economies with a GDP growth of 7.2% after weathering several challenges. Growth was underpinned by investment activity led by the Governments strong capital expenditure thrust, subsequent capital formation and return in private consumption. However, inflation remained above RBIs tolerance level for almost the entire year despite RBIs efforts or raising the repo rate.

Rupee depreciation along with high global commodity prices and a growing economy led to the widening of the current account deficit (CAD). However, in FY23, Indias forex reserves were sufficient for funding this CAD and this also enabled India to intervene in the forex market in order to manage volatility in the rupee.

Overall exports (merchandise and service) were US$ 770.18 billion worth during FY23 growing at 13.84% over the previous financial year. Factors such as high inflation, rising interest rates, weak external demand slowed industrial activity. As a result for the

FY23 IIP grew by 5.1% against a growth of 11.4% in FY22.

Annual GST collection in the financial year 2022-23 was at C18 lakh crore, clocking a growth of 22% over last year. It shows the resilience of the Indian economy amid several global headwinds. Net Direct Tax collections (provisional) for the FY23 stood at C16.61 lakh crore marking a growth of 17.63% on a y-o-y basis.

In an effort to push the infrastructure capex, in the financial budget for FY24, the Central Government announced a massive increase of 33% in the capex outlay to C 10 lakh crore, about 3.3% of the GDP. This is said to have a multiplier effect resulting in additional economic activities and job creation with all round economic activity being the single point agenda.

Outlook: Indias GDP growth for FY24 is estimated between 6-6.5%. Primary growth drivers are likely to be domestic demand and a pick-up in capital formation. Growth will also be supported by the structural reforms introduced by the government and the massive capex investments budget. The slowing global demand may push down global commodity prices and improve Indias CAD in FY24. The fiscal deficit for FY24 has been projected to be around C17.95 lakh crores or 6.4% of the GDP in FY24.

Headline inflation is projected to decline owing to easing commodity prices and a slowdown in consumer demand. The RBI has forecasted Indias GDP growth at about 6.5% in FY24. Despite a downgrade from FY23, it will continue to be one of the fastest-growing economies in the world.

India was ranked 63rd in 2022 in ease of doing business across the world among 190 countries, by the World Bank, improving its rank from 142 in 2014 and is expected to move a few notches higher in the coming years. This augurs well for India Inc.

Stainless steel

Stainless steel is an alloy of steel having chromium. The rust-resilient and corrosion-resistant attributes of stainless steel make it ideal for use in several industries.

Global stainless steel: The global stainless steel market size was USD 112 Billion in 2022 and is expected to reach a value of USD 223.89 Billion in 2032 registering a revenue CAGR of 8% during the forecast period.

The demand for stainless steel is rising across a range of end-use industries, including the automotive, construction, and aerospace sectors, among others, and this is one of the main drivers of market expansion. Due to its great strength, low maintenance requirements, and resistance to corrosion, stainless steel is in higher demand.

Automobile parts including gasoline tanks, suspension systems, and exhaust systems, among others, are frequently made of stainless steel. The requirement for lightweight, strong materials that can survive extreme weather conditions is driving the demand for stainless steel in the automotive industry.

Further, a significant factor in the expansion of the stainless steel market is the building sector. Due to its excellent durability and corrosion resistance, stainless steel is utilised in the construction of buildings and infrastructure, which results in long-term cost savings. Additionally, stainless steels high strength-to-weight ratio is crucial for the creation of aircraft components and is driving up demand for the material in the aerospace sector.

Stainless steel pipes and tubes are among the tubular products that are expected to experience moderate growth over the forecast period. The expanding construction sector, as well as the expanding demand from the oil and gas and chemical sectors, are the main drivers of the need for stainless steel pipes and tubes. The exceptional corrosion resistance and longevity of stainless steel pipes and tubes make them the perfect choice for these applications. Also, the growing usage of renewable energy sources like solar and wind energy, which need stainless steel components for their construction, is a factor in the demand for stainless steel pipes and tubes.

Indian stainless steel: The domestic stainless steel demand is expected to register significant growth over the next 3-5 years. India is adopting stainless steel faster because of its higher durability and lower maintenance.

According to Crisil Ratings, domestic demand for stainless steel is projected to log a healthy compound annual growth rate of 9% in the three fiscals through 2025, double the 4.5% pace of the past five fiscals. The demand will be driven by increasing adoption of stainless steel in railways which is a focus area for government infrastructure spending, and rising application in the automobile and construction sectors.

Demand from railways is expected to more than triple by fiscal 2025 and constitute 20% of incremental demand for the metal over fiscal 2023-2025. The recent Union Budget has doubled the amount earmarked for manufacturing railway coaches to C47,500 crore for fiscal 2024.

Demand from other major sectors with application of stainless steel, including consumer goods (45% of demand) and process industry (25%), is also expected to grow at a healthy clip of 7-9% over the next 3-5 fiscals given higher consumer spends and recovery in consumption.

(Source: https://www.financialexpress.com/ industry/domestic-stainless-steel-demand-will-continue-to-see-healthy-growth-till-fy25-crisilnbsp/3027430/)