Services Sector Current Affairs - 2019

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Nikkei India Services Business Activity Index: Key Facts

The seasonally adjusted Nikkei India Services Business Activity Index report makes the following observations about the Services Business Activity in India:

  • The index witnessed a drop for the second straight month in January to 52.2 from 53.2 in December.
  • The fall indicates a softer expansion in output.
  • The growth was supported by favourable public policies, enhanced capacities and greater demand.
  • The upturn was curbed by competitive pressures and election uncertainty.
  • The report notes that a sharp and accelerated rise in manufacturing production counteracted the slowdown in activity growth across the service economy.
  • The report notes that Business activity growth in the Indian service sector cooled further at the start of 2019, amid the weakest upturn in new work since last September.
  • Optimism regarding the outlook was sustained and the companies have continued to hire. The job creation was at a three-month high
  • Even though the inflation rates remained mild by historical standards, the costs rose to a greater extent than in December.
  • There was a moderate increase in sales that was the weakest in four months. The slowdown was centred on the domestic market as new orders from abroad grew to the greatest extent since last September.

Expansion rates in the Indian service sector have been at similarly modest levels for the past four months and the data for January extends the trend. There is some sign that growth may run out of steam, in the short-term at least, as seen by the weakest improvement in demand for four months and relatively subdued optimism.

Month: Categories: Business, Economy & Banking

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IMF, World Bank and WTO launch Reinvigorating Trade and Inclusive Growth Report

International Monetary Fund (IMF), World Bank and World Trade Organization have collectively launched report “Reinvigorating Trade and Inclusive Growth”. In this report all three international organisations have sought liberalisation of global service sector, asserting that barriers to these services trade currently is roughly as high as those to trade in goods about a half century ago.

Key Highlights of Report

Services comprise some two-thirds of global GDP and employment. The limited opening of service sectors to foreign competition impedes trade and productivity growth throughout sector and broader economy.  Countries should open up to international competition in services provided in other ways, including through foreign direct investment (FDI) and operation of foreign affiliates and temporary movement of workers across borders for the purpose of supplying services.

The full services trade liberalisation can raise manufacturing productivity by average of 22% across sample of 57 countries with larger benefits for countries with stronger institutional environments. Moreover, service sector has enormous contributor to growth and to trade including manufacturing trade.

Improved access to services from trade reform promotes economy-wide productivity and income growth, and given sector’s size, role of services productivity in overall economic performance is evident. There is interplay between services reform and manufacturing performance

Services comprise significant shares of value added of all sectors in economy and this is reflected in trade figures also. Only quarter of global trade is traded as services, on value-added basis half of the value of global trade originates in service sectors.

The trade in services sector has potential of contributing particularly strongly to productivity growth and economic growth overall. Prolonged slowdown in pace of trade reform is leading to widespread trade distortions and putting at risk strength and durability of global economic recovery, despite recent rebound in trade.

Digital economy revolution is opening new opportunities for cross-border trade and investment and this is changing nature of trade, elevating roles of policies relating to electronic commerce, investment and services trade.

Month: Categories: Business, Economy & Banking

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