Trends in global markets do not augur well for India's economy.
India's economic growth has been highly correlated with global growth over the last couple of decades. For instance, India plunged into a slowdown after the global financial crisis of 2008 that hit economies of Europe, the US and China. After a short recovery following years of anaemic global growth, slowdown fears are gripping advanced economies again. This cannot be anything but bad news for India.
The US is expected to see its gross domestic product, or GDP, growth slow from 2.9 per cent in 2018 to 2.7 per cent in 2019. China is projected to go down from 6.6 per cent in 2018 to 6.4 per cent in 2019 (See Global Growth On the Decline). “We expect the effects of the late cycle fiscal boost to fade in 2019. This, paired with tightening of monetary conditions, is likely to push growth below trend over the next two years,” says Sanjay Singh, Head Global Markets at BNP Paribas India. The US fiscal boost involved $1.5 trillion tax cuts and came after the Fed’s loose policy had run its course — the Fed rate has shot up from near zero post 2008 to 2.25 per cent.
The other factors likely to halt global growth are tighter monetary conditions and trade tensions. Global growth is estimated to be 3.7 per cent in 2018, 3.4 per cent in 2019 and 3.3 per cent in 2020. This will have repercussions for India.
This story is from the December 30, 2018 edition of Business Today.
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This story is from the December 30, 2018 edition of Business Today.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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