MUMBAI: India’s worsening economic outlook as coronavirus cases soar has raised the chance the central bank will cut interest rates at its policy review on Thursday, in spite of inflationary pressures.
Around two-thirds of economists in a Reuters poll expect the Reserve Bank of India (RBI) to cut the repo rate by another 25 basis points (bps) on Aug. 6 to a record low of 3.50 percent, and once more next quarter.
“High inflation has added confusion to the Reserve Bank’s policy outlook, but given the state of aggregate demand, we forecast the RBI will continue easing,” said Rahul Bajoria, economist at Barclays who expects a 25-bp cut.
Annual retail inflation rose in June to 6.09 percent from 5.84 percent in March, remaining above the RBI’s medium-term target range of 2 percent-6 percent.
The RBI’s recent policies have focused on financial stability and the need to support growth despite the price target.
The country was placed under one of the strictest lockdowns in the world in late March for over two months to halt the spread of the coronavirus. The government gradually eased restrictions in June although infections continue to rise.
The poll showed most analysts expect the economy to contract 20 percent in the June quarter versus the April forecast of a 5.2 percent fall and remain in negative terrain until the December quarter.
For the full year 2020/21, the economy is likely to shrink 5.1 percent, which would be its weakest performance since 1979, a sharp contrast to the 1.5 percent expansion forecast in April.
Apart from rate cuts, Upasna Bharadwaj, economist at Kotak Mahindra Bank, expects liquidity and regulatory measures from the RBI to address demand shocks and financial market dislocations.
“RBI may look to widen the policy corridor to 75 bps by easing reverse repo by a higher quantum,” she said, adding that though they expect a 25-bp rate cut, it may not be effective in the current environment.
The RBI has already reduced the repo rate by a total of 115 basis points since February, on top of the 135 basis points in an easing cycle last year, from 6.50 percent, responding to slowing growth.
Some economists, however, feel it may be prudent for the RBI to pause in August before resuming its rate-cutting cycle once inflation has stabilized.
Weakness in growth versus above-target inflation, improving indicators and concerns over inflation expectations will put the RBI in a tough spot, said DBS economist Radhika Rao.
“It will be a close call, but we see slightly higher odds for a pause.”
India’s central bank likely to cut rates despite inflation risk
https://arab.news/83nkg
India’s central bank likely to cut rates despite inflation risk
- Annual retail inflation rose in June to 6.09 percent from 5.84 percent in March
- Country was placed under one of the strictest lockdowns in the world in late March
Using space science to protect Saudi Arabia’s environment
- Kingdom is harnessing satellite technology to forecast disasters, boost agriculture
RIYADH: Learning space science has delivered significant environmental benefits worldwide, helping many countries better understand and manage climate challenges.
Saudi Arabia is now taking steps not only to explore the galaxy but also to invest in future generations who can apply space science to pressing environmental issues at home.
Last November, the Space Academy, part of the Saudi Space Agency, launched a series of seminars designed to enhance knowledge and develop skills in space science and technology, with a particular focus on Earth observation.
Running for nearly a month, the program formed part of a broader strategy to nurture national talent, raise scientific awareness, and build data capabilities that support innovation and research across the Kingdom.
As efforts to strengthen the sector continue, important questions remain: How can space science translate into tangible environmental benefits? And how large is the global space economy?
In an interview with Arab News, Fahad Alhussain, co-founder of SeedFord, highlighted the scale of the opportunity and its environmental impact.
“To be frank, the slogan that we always use in space is that ‘saving the Earth from the space.’ It is all about this,” Alhusain told Arab News.
“You can recall a lot of related environmental issues like global warming, related to forests, related to the damage that happens to the environment. Without space, it would be almost impossible to see the magnitude of these damages.”
According to Alhussain, satellites have transformed how experts observe environmental changes on Earth, offering a comprehensive view that was previously impossible.
He said that “the transformation of technology allows even the non-optical ways of measuring, assessing, and discovering what is going on in the environment … you can even anticipate fire before it happens in the forest.”
“You can detect the ice-melt down, you can get huge amount of information and can see it through the weather maps…there is a huge section in the economy for the environment,” Alhussain commented.
A 2022 report by Ryan Brukardt, a senior partner at McKinsey & Company, published by McKinsey Quarterly, found that more than 160 satellites currently monitor Earth to assess the impacts of global warming and detect activities such as illegal logging.
Brukardt cited NASA as an example of how advanced satellite tools are used to track environmental changes, including shifts in ocean conditions, cloud cover, and precipitation patterns. He also noted that satellite data can help governments determine when immediate action is needed, particularly in response to wildfires.
FASTFACT
Did You Know?
- Satellites collect massive amounts of data, and AI is used to help interpret this information more efficiently and predict future outcomes.
- The global space economy surpassed $600 billion in 2024 and is projected to exceed $1 trillion by 2030.
- Saudi Arabia has established three key entities: the Supreme Space Council, the Saudi Space Agency, and the Communications, Space, and Technology Commission.
Beyond disaster response, satellites offer vital insights for agriculture. According to Brukardt’s report, scientists can use space-based data to monitor crop development and anticipate threats to harvests, such as drought or insect infestations.
These wide-ranging applications explain the rapid growth of the global space economy.
According to World Economic Forum research, the sector is projected to reach $1.8 trillion by 2035, nearly tripling from $630 billion in 2023.
For Saudi Arabia, expanding space science capabilities could help address the country’s arid conditions by monitoring desertification and identifying sources of air pollution. Early detection of droughts, heatwaves, and crop stress could support more effective environmental planning and response.
Space-based data could also play a critical role in tracking environmental changes in the Red Sea and surrounding coastal ecosystems, strengthening marine conservation efforts and supporting the Sustainable Development Agenda.
As Alhussain emphasized, advancing knowledge in space science and satellite technology enables experts to measure environmental damage accurately and predict disasters before they occur, allowing for more effective responses.
By investing in space science education and research, the Kingdom can build national expertise, strengthen environmental protection policies, enhance food and water security, and contribute to global efforts to combat climate change—while also benefiting from the rapidly expanding space economy.
Ultimately, a deeper understanding of space and its applications offers Saudi Arabia, and the world, better tools to anticipate climate challenges, protect ecosystems, and safeguard biodiversity.
“By collecting data and using satellites, you can better analyze and measure so many things that help the environment,” said Alhussain.
“There will be patterns where you can warn people, scientists and decision makers to do something about it.”
