Ideas

Peace

In a world set to reach nearly 10 billion inter-connected people, power will come from creating peace, prosperity and freedom so that we can make breakthroughs in how we live together, and this requires a transformation in the very definition of power, and the purpose and principles by which it is exercised

GPC’s Macro Thought Leadership

GPC’s research focuses on the geostrategic changes in the world and the implications of for peace, prosperity and freedom. Our analysis seeks to find the patterns and identify the new forces that are the signs of our times and will determine the future of the world


The world is in a historic transition of great power hegemony, world order, population and resources which will change the very nature of civilisation. These transformations create discontinuities and a dynamic canvas on which the world’s future will be written

The 21st Century has been widely predicted to be the Asian Century, in which the continent, home to 60% of the world’s population, will become the world’s dominant economic, political and even cultural force. Within this continent of 49 countries, two will disproportionately impact the trajectory of the 21st Century on account of their scale and growth potential: China and India. The relationship between these two countries as well as the trialogue with the world’s current hegemon, the United States, will will be critical to shaping global economic and political trends for generations to come.

 

A modern India lifting a billion people out of poverty will need a large, modern and diversified economy to not only realize the aspirations of people but also to clothe, feed, employ and educate what will become the world’s largest population within the next five years and this will require an India that is open to the world and dedicated to unlocking the potential of its people and its assets

 

We bring our network of business leaders, entrepreneurs, influencers and thinkers who are at the frontline of change across to provide insights into the global issues that are rapidly changing the world and how they see an impact being made for good

 

We recognise the complex and rapidly changing nature of India’s markets and economy as it grows and expands internationally and have focused the firm’s thought leadership on detailed research to generate insights into the macro-environment, market strategy, investment opportunities and challenges to generate attractive risk adjusted returns

We live in revolutionary times. Increasingly political, economic and social volatility is driving change on a global level, creating both risks and opportunities for international investors. Greater Pacific Capital’s thought leadership and investing strategy placed it at the forefront of global change

Selected news that makes the difference

India’s FY23 FDI On Track to Cross US$100 Billion.

The government said that the ‘Make in India’ initiate to boost manufacturing in the country completes eight years on September 25 with annual FDI doubling to US$83 billion and on the back of economic reforms and Ease of Doing Business in recent years, India is on track to attract US$100 billion FDI in the current fiscal. 

India Develops its First Cervical Cancer Vaccine.

The Serum Institute of India (SII), the world's biggest vaccine maker, has developed the country's first cervical cancer shot; the indigenously developed vaccine will make the country self-sufficient in curbing female mortality caused by cervical cancer.

India Overtakes the UK As World’s Fifth Largest Economy.

The size of the Indian economy in nominal cash terms in the quarter through March was US$854.7 billion, while that of the UK was US$816 billion and owing to India’s fast-growing economy, there is likely to be a huge gap between India and the UK within the next few years.

India, Indonesia Sign Trade Deal Worth US$1 Billion.

The signing of the trade agreement can further strengthen the business cooperation between the two countries and be able to have a positive impact on the economies of Indonesia and India; there are eight trade deals signed by companies between the two countries and both India and Indonesia are targeting to reach the trade value of US$50 billion in the future.

On the Back of Large Open Market Exits, August Witnessed the Highest PE/VC Exits in India in 2022.

After remaining resilient for almost seven months amid global headwinds of tightening liquidity and rising inflation, Indian PE/VC investment flows for the first time have shown tepidness, reaching a nineteen-month low and investors are being more circumspect in making investment decisions as the competitive pressures witnessed in the previous year have ebbed and the cost of capital has gone up.

Agencies Slash India’s GDP Growth for the Fiscal Year 2023.

India’s Q1 FY23 GDP growth numbers at 13.5% might be robust in itself, but have left a spate of agencies, including Citigroup, Goldman Sachs, Moody’s and SBI concerned due to higher expectations.

Spotlight on the key monthly news events shaping media coverage in India

Media coverage in the world this month covered Vladimir Putin’s announcement of partial military mobilization in Russia and Fed’s policy interest rate hike of 0.75bps, and the economic and market turmoil underway in the UK

 

Vladimir Putin Announces Partial Military Mobilization, Russia’s First since the Second World War

 

Russian President Vladimir Putin declared a partial mobilization of Russia's armed forces on 21 September 2022, signing a decree that will send Russians who have gone through military training to join the fight in Ukraine. The announcement came just a day after some Russian-controlled areas in Ukraine announced plans for referendums on becoming part of Russia.

 

An article in Germany’s Spiegel through that the President’s decision to mobilise citizens was extremely dangerous for the world, for including Russia itself. “Lawyers like Alexei Tabalov, who heads up an NGO called Schooling for Recruits, speak of panic among the populace. Tabalov says he has had numerous phone conversations with mothers, sisters and wives, and that he is forced to tell them that their sons, brothers and husbands have hardly any chance of avoiding conscription… Partial mobilization is a huge and risky move for Putin. It contradicts the system of rule he has built over the decades, one rooted in the principle that Russian citizens should not be unduly troubled. For years, the regime has demanded little from its people – it expected obedience, but no expressions of loyalty. In contrast to Soviet times, membership in organizations loyal to the Kremlin has been voluntary, as is participation in official demonstrations.”

 

The Washington Post discussed how until now neither India, nor China was inclined to defend a global order against Russia, but the war’s impact might now be forcing a rethink. “For the first time, Putin publicly admitted that China had “questions and concerns” about the continuing war in Ukraine. Likewise, Modi reminded Putin that the present era is “not one of war.” These developments are noteworthy. Until now, China has openly supported Russia, while India has avoided public criticism of Russia’s invasion of Ukraine… India and China share Russia’s resentment about their second-tier status in a U.S.-led international order. That makes both countries likely to continue to be tolerant about Moscow’s ambitions… But Moscow’s war in Ukraine has disrupted the economies of both China and India. The conflict has affected food and energy supplies worldwide, raising the price of oil and other commodities for India and China.”

 

Finally, an analysis in Atlantic Council focussed on how the U.S. should deter Russian nuclear use in Ukraine and how it should respond if that fails. “Russia might use nuclear weapons to achieve its goals in the war in Ukraine—a risk that has only grown as Russian forces confront Ukrainian counteroffensives. Such nuclear use could advance the Kremlin’s military aims, undermine US interests globally, and set off a humanitarian catastrophe unseen since 1945. To deter such a potential disaster, the United States should issue public, deliberately vague threats of serious consequences for any Russian use of nuclear weapons and be prepared to follow through with conventional military strikes on Russian forces if deterrence fails… The best US response if deterrence fails may be a mix of options…an intensification of ongoing efforts to counter Russian aggression in Ukraine and a limited conventional strike against the Russian forces or bases that launched the nuclear attack.

 

Fed Hikes Policy Interest Rate by 75 Basis Points

 

The Federal Reserve hiked policy interest rate by 75bps on 21 September 2022. The uptick is the third consecutive 0.75 percentage point move and the fifth increase in the last six months – all part of an effort by the central bank to cool runaway inflation. Cumulatively, the historic rate hikes mark the largest six month increase in 41 years. Global media commentary sought to highlight the local implications of the rate hike.

 

The Financial Times looked for the domestic silver lining of the aggressive interest rate hikes – savers in the U.S. finally receiving a modicum of yield on their cash. “One of the unfortunate consequences of the Federal Reserve’s zero-interest rate policies – imposed first after the financial crisis and then again during the pandemic – has been the impact on humble savers. They have been punished, their returns ground into dust. Watching your interest compound at a government-insured savings institution has become as quaint a memory as dialling a rotary telephone. That has been changing this year as the Fed has begun raising rates to hold down inflation. Big bank customers are unlikely to benefit much because those lenders are awash in deposits and lock in much of their clientele with auto-pay options and other conveniences. But some of their competitors are offering better deals. Yields on money-market mutual funds climbed above 2 per cent this week for the first time since July 2019, says Peter Crane, chief executive of Crane Data, who added that returns of about 5 per cent were the norm in the decade or so before the financial crisis… As painful as the Fed’s rate rises will be for the US economy, they also promise to provide a little yield and maybe a modicum of comfort for an often-forgotten set of savers.”

 

China Daily explained that while the Fed's continuous rate hikes are worsening the global economic outlook, they would not impact China's economic fundamentals and reduce its global attractiveness. “The Fed's aggressive rate hikes and a resultant stronger dollar is a routine ploy used by the US to loot the wealth of the world. Because of the dominant position of the dollar, many countries have to follow the Fed in raising interest rates in order to maintain macroeconomic stability. Such forced rate hikes raise funding costs and worsen the fundamentals of the global economy. However, the Chinese economy is not afraid of the Fed's rate hike trap. Moreover, after nearly two years of continuous appreciation, the US dollar is likely to face periodic adjustment at any time. China's obvious advantage in being the second-largest consumer market for goods helps it to promote high-quality development and build a new development paradigm.”

 

An article in Reuters quoted perspectives of several analysts on how the Bank of Japan has stuck to its global outlier status by maintaining ultra-low interest rates, likely to become the last major monetary authority in the world with a negative policy rate. “The contrast between the Fed and BOJ has become clear. The Fed will prioritise beating inflation even at the cost of cooling the economy, whereas the BOJ will patiently maintain ultra-easy policy until inflation stably hits 2%. It's notable that the BOJ decided to extend part of its pandemic-relief funding programme until March next year. It suggests the BOJ won't change its forward guidance throughout the period. It also leaves the impression there will be no change in monetary policy during Kuroda's remaining term… The decision was just as expected – BOJ's inaction has long been expected, and the ongoing (currency) market moves are driven mainly by the U.S. monetary policy shifts.”

 

Market and Economic Turmoil in the UK

 

Plans of a GBP45 billion (c.US$48.4 billion) tax cut and massive new borrowing to pay for it sent shockwaves through markets and caused a crisis of faith in the ability of the new British government to pull the country’s stalling economy back from the brink of recession. Media coverage from around the world was overwhelmingly critical of the government’s plans and publications covered how the economic damage is a result of Brexit, how Britain’s woes are like that of an emerging-market economy and how the UK’s tax cuts are relevant to India.

 

An op-ed in Financial Times discussed how UK’s ongoing fiscal and monetary measures are merely being used as scapegoats to explain the market slide, and it is the underlying economic damage caused by Brexit that is responsible for the UK’s market rout. “The markets are primarily reacting to a bad fiscal statement from Kwasi Kwarteng. But both the chancellor’s decisions and the backlash are the culmination of actions and attitudes that all spring from Brexit absolutism; from lost market access, continued confrontations with the EU, overhyped trade deals that add little to GDP, the sustained assault on British institutions and prime minister Liz Truss’s onslaught on economic orthodoxy. Investors have got the message. Britain is not the bet it once was… the British economy is exhibiting the comorbidities of a badly botched Brexit that weakened its resistance to shocks. When the markets were spooked last week, little could reassure them.”

 

An op-ed in The New York Times argued how the country has been experiencing currency woes similar to that of an emerging-market economy. “Deficit spending in an advanced economy normally causes the value of that country’s currency in terms of other currencies to rise, because the collision between fiscal stimulus and tight money leads to high interest rates, and these high rates attract an inflow of capital from abroad. When US President Ronald Reagan cut taxes while increasing military spending during the early 1980s, the dollar surged against other major currencies, like Germany’s Deutsche mark (this was long before the creation of the euro) … The parallel with Reaganomics was obvious. Interest rates duly rose. But in this case, rather than rising, the pound plunged… This wasn’t the market reaction you’d expect for an advanced economy. It was instead similar to what you often see in emerging markets, where investors worry that governments will cover increased deficits by printing more money, causing inflation to accelerate.”

 

Finally, an op-ed in Fortune India explored how the International Monetary Fund openly criticised the UK’s tax cut, warning that it would raise inequality and add inflationary pressure, thereby worsening the cost-of-living crisis the country is going through. “The IMF said the tax proposals were at cross purpose with the monetary policy and advised to consider ways to provide support that is more targeted and re-evaluate the tax measures, especially those that benefit high income earners.” Earlier in the month, India relegated the UK to sixth position in world rankings. On the back of this, the article further highlighted that the UK’s tax proposals are extremely relevant to India. “These should worry Indians for the simple reason that India’s tax regime too is skewed and regressive in nature which worsens inequality, more so after a new tax regime came into place after September 2019… It is by now well known that rising inequality is a global phenomenon, not restricted to India. But India stands out because the rise in inequality here is far more than anywhere else in the world.”

Key insights and forecasts that show us what is to come

Rebooting Global Cooperation is Imperative to Successfully Navigate Shocks.

Successfully navigating the unprecedented confluence of global shocks - COVID-19, food and energy insecurity, a surge in inflation, looming crises of development financing, global recession risk, and the climate crisis - will entail considerably stronger global cooperation.

Uncoordinated Monetary Policies Risk a Historic Global Slowdown.

The present danger is not so much that current and planned moves will fail eventually to quell inflation but that they collectively go too far and drive the world economy into an unnecessarily harsh contraction.

What Does Russia’s ‘Partial Mobilization’ Mean?

Mobilization will not turn the tide of war, but may allow Putin to implement his political strategy, which is to outlast the Europeans but what is uncertain is whether Russian popular opposition to mobilization will derail military plans; Ukraine has a window of opportunity for battlefield success before these mobilized troops arrive.

China’s Slow-Motion Financial Crisis Is Unfolding as Expected.

When local government financing vehicles begin defaulting on their bonds, Beijing will need to actively manage the crisis, most likely using the central bank’s balance sheet.

Russia and India: A New Chapter.

The balance in Russian Indian relations is shifting decidedly toward New Delhi and Russia’s break with the West and ever closer ties with China because of the war against Ukraine will make sustaining its partnership with India more challenging.

Data Governance, Asian Alternatives: How India and Korea Are Creating New Models and Policies.

A stark contest between democracy and autocracy will shape the governance of technology and data, but two Asian democracies, India, and Korea, are carving out distinctive paths on data policy, not just following Western or Chinese models.

How Beijing Plans to Decouple from the Dollar-Based Global Trading and Financial System.

Beijing is challenging the privileged status of the Almighty Dollar, as it tries to carve out its own sphere of influence.

Managing the Risks of US-China War: Implementing a Strategy of Integrated Deterrence.

If the U.S. is to maintain a constructive role in preventing the outbreak of a cross-Strait war, it will need to implement a strategy to deter Chinese aggression against Taiwan that is consistent with U.S. interests, and that provides clarity around the important matter of preventing nuclear escalation, in the event a conflict does occur.

The Imminent Election Crisis in Brazil.

If Luiz Inácio Lula da Silva wins, as polls currently suggest he will, there will be an institutional crisis in Brazil in coming months and the only question is what it will look like—and who will ultimately prevail.

Does Southeast Asia Need a New Development Model?

Southeast Asia is one of the most economically and developmentally successful regions in the world, however, the ability of the region’s developing economies to sustain this success is increasingly in question.

The Key Events Driving Global Instability & Opportunity

Big Picture TEST Metrics for the US, India and China, February 2022

India’s Manufacturing PMI was down to 55.5 in December 2021 from a tenth-month high of 57.6 in October, remaining in the growth territory, amid slower rise in sales and new orders, even as business sentiment was dampened by concerns surrounding supply-chain disruptions, COVID-19 and inflationary pressures. Exports and imports grew by 39% and 40% respectively as compared to the same period last year driven by rising international demand for Indian goods. No further rate cut was announced by the RBI during this month.

 

China’s Manufacturing PMI rose to 50.3 in December 2021 from 50.1 in November, slightly above market expectations of 50. The latest reading pointed to a modest growth rate in the manufacturing sector, which is expected to remain subdued at the start of the new year due to uncertainties brought by the pandemic outbreak in Xian and Omicron variant. Exports and imports grew by 21% and 20% respectively as compared to the same period last year.