Use a clear compass to navigate our challenges and opportunities

Source– The post is based on the article “Use a clear compass to navigate our challenges and opportunities” published in Live mint on 17th February 2023.

Syllabus: GS3- Economy

Relevance: Socio-economic development

News- The article emphasizes the need to analyse the economic and geopolitical conditions affecting the world.

What is the present macroeconomic scenario around the world?

According to World Bank projections, the share of trade as a percentage of global GDP climbed from roughly 25% in 1970 to 52% in 2020.

Global value chains (GVCs) have grown and spread across the globe. Asia is expected to generate $22 trillion in new wealth between 2020 and 2025.

In 2023, emerging markets will grow more than twice as quickly as developed markets, predicts the IMF.

What are the other events that have impacted the world?

Climate change is yet another phenomenon that has had an impact on not just the world economy, but also our entire society. The decade from 2011 to 2020 has been the warmest on record.

It has become essential for nations to include climate change in all policy deliberations.

Digitalization has also strongly influenced all aspects of society which picked up steam after the pandemic struck.

How can India push for its interests in this situation?

Strategic integration with GVCs is one option. It can increase production by transferring information, investing in them and using international best practices.

India can benefit from investing in climate-resilient and sustainable infrastructure. According to a World Bank analysis, investing in more resilient infrastructure would produce an average net benefit of $4.2 trillion.

The country has an opportunity to continuously expand their own digital infrastructure.

A significant digital payment platform in India, the Unified Payments Interface (UPI), has enrolled 376 banks and facilitated 7.3 billion transactions, with a total value of ₹11.9 trillion.

What is the way forward?

India will soon have to deal with many of the same issues affecting the rest of the world, such as rising debt levels, inflation, food and energy crises, and geopolitical conflicts.

Overcoming obstacles in a changing external environment necessitates deliberate action across all socioeconomic domains.

It also necessitates a mentality change that accepts the certainty of change.