Warning that a recession was looming large in the United States, renowned Nobel laureate, Joseph Stiglitz, on Thursday said that emerging economies like India could be hit by it but China may survive.
“It is almost certain that there would be a sharp reduction in growth in the US…it will certainly have an impact on countries like India, while China could survive the recession or sharp slowdown in the US, given its large resources,” Stiglitz said on the sidelines of a conference on investment organised by mutual fund major, Pioneer Investments, in Vienna.
A two percentage point fall in growth there means the economy contracting by USD 300-billion. The chances are that the gap could get larger, he said.
There could be implications for India because of its fiscal problems, he said.
On capital inflows into India, the former chief economist of the World Bank said that large inflows into a country could be destabilising.
These flows should be restricted…the Indian Government could tax capital gains made on these flows, he said.
The Indian Government has, however, denied any plans to restrict inflows. The Government of Chile has, however, imposed controls to stabilise inflows into its economy, he said.