US economy slowdown due to trade war will impact India, says economist Gita Gopinath

By: |
Updated: Mar 26, 2018 11:30 AM

Since India is a part of global system, such a trade war can have impact on its growth rate, economist Gita Gopinath said.

gita gopinath, gst implementation, gst, cyclical downturn on export, gst, exim bank, input tax credit, economy, indian economyNot only the trade but central banks, interest rates, inflation and other variables will also see impact of a full-blown trade war. (File Photo)

A full-blown trade war will definitely have an impact on India, economist Gita Gopinath told ET Now. As the US slows down due to trade war, India’s economy will also see an impact, the professor at Harvard University said. The worries related to trade war have now started to hold ground, and with tariffs being put in place, the entire scenario looks disruptive, she added. Not only the international trade but central banks, interest rates, inflation and other variables will also see an impact of a full-blown trade war, she said. It’s also not clear by what extent this trade war can be limited, she said.

Since India is a part of global system, such a trade war can have impact on its growth rate. Even if tariffs are not being imposed on India directly, just because rest of the world including the US may slow down will have an impact on India, she said.

Non-performing assets (NPAs) are posing big problem for India and with new bank fraud cases coming to light, larger problem related to governance at these financial institutions is emerging, she said.

CLSA on trade wars

Meanwhile, global brokerage CLSA told ET Now that trade wars are unlikely to impact India in any way. Macroeconomic numbers point to limited impact on the Indian economy, CLSA added.

What Macquarie said

Donald Trump’s trade war will hit the US economy hard and force it into a recession, Macquarie said citing a research paper by Peterson Institute for International Economics (PIIE). In case of the trade war escalating, and China and Mexico retaliating through reciprocal trade barriers,only the US is to lose ultimately, the report said. “ A full-blown trade war with China and Mexico will only plunge the US economy in recession,” the paper said. The paper is written PIIE economists Pedro Nicolaci da Costa and Eitan Urkowitz. It will also lead to lower incomes, reduced consumption and investment flowing into the US, the paper said.

 

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Maharashtra agriculture department files FIR against 13 companies for poor soybean seeds
2Pandemic Times: Growth starts faltering
3Finance Ministry report says green shoots in economy visible, lists indicators that show revival