Global economy Overview Inflation reached decadal highs at the beginning of FY23 due to geopolitical uncertainties. However, since the second half of the year, inflation has been moderating, indicating a positive outlook. The global economy appears to be on track for a slow yet steady recovery from COVID-induced challenges and the Russia-Ukraine war. Global economic output is likely to grow gradually, owing to a stabilising inflation trajectory that is reviving consumer sentiment and investor confidence. Emerging market and developing economies (EMDEs) are also witnessing growth across multiple sectors, fuelled by government expenditures in infrastructure and manufacturing sectors. Central banks’ monetary policies are expected to bear fruit, leading to a decline in global inflation from *8.7% in CY22 to 7.0% in CY23 to 4.9% in CY24. It is anticipated that the pentup demand in numerous economies, along with a considerable reduction in inflation, will drive economic growth in CY23. [*Source: IMF World Economic Outlook, April 2023]. Outlook Despite mounting inflationary pressures, the global economy is buoyed by a strong labour market, higher domestic spending, an influx of foreign capital and a prudent response to the energy crisis in Europe. Many EMDEs have already recovered, which has bolstered real incomes. An optimistic global outlook would also be determined by the pace and effectiveness of fiscal and monetary policy actions implemented to boost economic expansion. Going forward, the governments and central banks of the world are expected accelerate economic growth through targeted, needbased measures. 3.4 Global economy Advanced Economies Emerging Market and Developing Economies 2.8 3 Global Graowth Rate (%) 2022 2023 2024 2.7 1.3 1.4 4 3.9 4.2 (Source- IMF World Economic Outlook, April 2023) Indian economy Overview The Indian economy has remained relatively shielded from the geopolitical and high inflation-induced global economic headwinds in the fiscal year 2023. India has emerged as one of the fastest-growing major economies worldwide and registered a growth rate of 7% in FY23, according to the second advance estimates of the National Statistical Office (NSO). To foster economic growth, the Indian government has rolled out several initiatives, such as the PM Gati Shakti (National Master Plan), the National Monetisation Plan (NMP) and the Production Linked Incentive (PLI) plan. Moreover, with declining inflation, rising disposable incomes and continued investment in infrastructure development, economic growth is anticipated in the future. Outlook Strong credit growth, stable financial markets and the government’s greater focus on infrastructure and capex are expected to crowd in substantial investments. Although the global economic outlook is challenging, the fact that the Government of India and the Reserve Bank of India have been able to safeguard the Indian economy from an impending global recession underscores India’s robust economic fundamentals. India is showing signs of recovery, and pent-up demand during the last two years offers hope for new growth opportunities in the domestic market. Global dairy industry According to the IMARC report, the global dairy industry is projected to register a CAGR of 5.79% during the forecast period (2023 to 2028).1 Milk production in the European Union, the second largest milk producer, is projected to at a slower pace when compared to the world average. Despite a slight surge in domestic milk production compared to the previous decade, China is anticipated to remain the world’s largest importer of milk products. Moreover, population growth has raised the demand for livestock products and is a primary factor in increasing the import of dairy products to Asian countries. In the next decade, the world’s per capita consumption of fresh dairy products is expected to grow by 1.4% per annum, slightly faster than the last decade due to higher per capita income growth.2 Indian dairy industry India is the largest producer of dairy products in the world and ranks fi rst in terms of milk production, contributing 23% of the global milk production. 3 1. https://www.imarcgroup.com/global-dairy-market-reach 2. https://www.fao.org/3/CC0308EN/Dairy.pdf 3. https://www.investindia.gov.in/sector/food-processing/dairy Management discussion and analysis 135 MDA | Statutory Reports
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