Sat. May 18th, 2024

The US may experience a deep recession soon, with potential impacts on India’s markets and exports, according to economist Neelkanth Mishra. In an interview with NDTV, Mishra explained that even though the US was expected to enter a recession this year, its GDP growth did not fall as anticipated. However, Mishra warned that the US’s fiscal deficit, which has increased by 4% of GDP, could lead to a recession if it is not sustained. He also highlighted that the high fiscal deficit has caused rates to rise, leading to a contraction in global demand. This could have four pathways of impact on India: slower growth in the services sector, a decline in goods exports, dumping of products in India, and increased volatility in financial markets. Mishra advised that India focus on macroeconomic stability to deal with potential turbulence. He also refuted claims that the central government has a significant impact on the economy, asserting that state governments play a more influential role in near-term economic momentum. Mishra further advised the middle class to exercise caution in the face of global economic turbulence.

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