Economy

US Fed move won’t have big impact on Indian economy: CEA


CHENNAI: The US Fed’s move to keep interest rates unchanged, but signalling new economic projections with borrowing costs likely rise by another half a percentage point by yearend, will not have a major impact on the Indian economy, chief economic adviser V Anantha Nageswaran has said.
“Of course, (the impact will be) to the extent that the US financial markets have to revise their expectations because they were initially pricing in rate cuts by the end of this year. Now, they have to postpone it to 2024. So, to that extent it will have some impact on the financial markets in the US, which can then spill over into the global markets. But, I don’t think it is a big factor for us to worry about,” he added.
However, the US markets remaining buoyant makes it a risk factor. “The markets did not correct in the past two years in spite of a rate increase by 500 basis points (100bps =1 percentage point). We haven’t had a proper bad market for quite a while. So, that remains a risk factor for the world economy. But, with respect to the capital market,nobody can say when it materialises,” Nageswaran said.
To a query on dip in merchandise and non­oil exports in April over the corresponding month in FY23, he said export growth is dependent on the rest of the world.
“If the growth rate goes down in the rest of the world, naturally the exports will be affected. The fact is that in FY22, we had a good pickup in merchandise exports. FY23 had a base year challenge to overcome. Maybe in FY24, the base year challenge may not be so high. There could still be a modest growth in merchandise exports.” Earlier, delivering his address at a Ficci event on ‘Indian Economy @100 – Journey to the Amrit Kaal’, he said, the agriculture sector looks to be in good health.





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