A recent poll conducted by Reuters economists predicts that India is most likely boast the world’s fastest-growing major economy this year. There are however, factors like the rising trade tensions between the United States and China may restrain that growth.
The poll was taken 11-18 April this year and has predicted that India’s economy will expand by 7.4% in the fiscal year that began this month. After growth slowed sharply for much of 2017, India regained its status as the world’s fastest-growing major economy in the quarter ending December 2017.
According to Reuters, the recent “tit-for-tat import tariffs imposed by the U.S. and China” are a cause of concern about a looming full-fledged global trade war which could affect the status of the world economy.
Twenty nine economists believe that India’s economy is in danger of being directly affected by the ongoing trade dispute.
“India runs the risk of being caught in the middle of the trade spat between the U.S. and China,” said Hugo Erken, senior economist at Rabobank.
“The damage would especially be large if India retaliated with an import duty on either U.S. or Chinese imports,” said Erken, adding that such a scenario was unlikely.
However, not all economists shared that view. Nine respondents are of the belief that India’s economy would in fact, benefit from the dispute.
“Though in the short-term a trade war between U.S. and China may impact global trade including India, in the long-term, India is likely to benefit as China will be forced to devaluate its currency to remain a dominant player in the world market,” wrote RK Gupta, managing director at Taurus Asset Management.
“In that scenario, India’s exports will be more competitive with China.”