IMF maintains caution on impact of increased hedging against dollar weakness
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Mint
3 hours ago
- Mint
Trump's tactical rant: Don't let it work
The absurdity of Donald Trump referring to India's economy as 'dead" in a social media post, clubbing India with Russia for this diagnosis, seems to reveal some exasperation in the White House. The US president's apparent fury need not bother us. Also Read: Mint Quick Edit | Trump's tariff post: What should India do? If anything, we could take it as an endorsement of India's trade position, which has not yielded so far to unreasonable demands even as other US trade partners have settled for raw deals. As if to dismiss Trump's description of our economy, commerce minister Piyush Goyal pointed out in Parliament on Thursday that it was seen as a bright spot in the world by international agencies and would soon be the third largest by size. Also Read: The long arc of an India-US trade deal could end in a win-win Goyal also made it clear that India will do what it must to safeguard its national interest. By setting the record straight and displaying poise, India has shown maturity and signalled that it won't get rattled. Also Read: The IMF's 'World Economic Outlook' is too coy for a Trump-shaken world As trade talks with the US have not been suspended, Trump's language seems like a pressure tactic. But New Delhi must hold firm in its quest for a deal that's fair and well balanced. A near-term setback in US-bound exports may be better than inking a bad agreement that locks us in, even if it makes Trump rant.
Time of India
9 hours ago
- Time of India
Trump tariff: 'Muted' impact on growth, may 'hit exports'
NEW DELHI: US President Donald Trump's move to impose a 25% tariff on Indian imports from August 1 and an unspecified "penalty" for buying Russian oil and defence equipment is unlikely to have a major impact on India's overall economic growth but short-term sentiment may be dented. Tired of too many ads? go ad free now Growth is expected to be in 6.2%-6.5% range in the current fiscal despite some short term pain for exports and uncertainty for a few key sectors. Estimates by brokerages show the impact on GDP growth could be in the 30-50 basis points range. The optimism on growth is based on a raft of factors, the key being the fact that the Indian economy is largely led by domestic demand which is expected to remain intact. Several key indicators are showing signs of robust expansion against the backdrop of global uncertainty and a recent finance ministry report for June said with inflation remaining within the target range and monsoon progress on track, "the domestic economy enters the second quarter of FY26 on a relatively firm footing", as domestic supply and demand fundamentals remain resilient. "While the US is India's largest trade partner, the Indian economy is relatively more domestically oriented than most of the region and relies far less on trade," said Aditi Raman, associate economist at Moody's Analytics. "Pharmaceuticals, gems, and textiles are key sectors that are likely to be hit. A point of contention is market access to the key agricultural and dairy sector, which India has historically been reluctant to grant," said Raman. India still remains the fastest growing major economy and the IMF in its latest forecast has raised its GDP growth projection for FY26 to 6.4% from the earlier 6.2%. It also lifted the projections for global growth, citing easing global trade tensions. Some experts see a muted impact of the latest threat from the US President on the country's growth. "At 25%, tariffs on India are higher than emerging market Asian peers, but we expect final tariffs to settle lower as trade deal talks progress. Tired of too many ads? go ad free now We estimate 30 basis points (bps) of GDP growth impact should this threat materialise," Barclays said in a note. Some economists said the extent of the impact on growth would also depend on the size of the penalty if it is imposed as talks are still ongoing. "The tariff (and penalty) now proposed by the US is higher than what we had anticipated, and is therefore likely to pose a headwind to India's GDP growth. The extent of the downside will depend on the size of the penalties imposed," said Aditi Nayar, chief economist at ratings agency ICRA.
Time of India
12 hours ago
- Time of India
Donald Trump has succeeded in imposing US tariffs globally now — but this won't last as nations will learn how to retaliate: Kenneth Rogoff
Kenneth Rogoff is Maurits C. Boas Professor at Harvard University and former chief economist at the IMF. Speaking to Srijana Mitra Das, he discusses Donald Trump , tariffs, the dollar — and winning moves by India: Q. What is your new book 'Our Dollar, Your Problem' about? Explore courses from Top Institutes in Please select course: Select a Course Category Finance MBA Product Management Design Thinking CXO Data Analytics PGDM MCA Digital Marketing Data Science Cybersecurity Artificial Intelligence healthcare Others Degree Public Policy Operations Management Technology others Leadership Project Management Data Science Management Healthcare Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Fintech & Blockchain India Starts on undefined Get Details Skills you'll gain: Duration: 9 Months IIM Calcutta SEPO - IIMC CFO India Starts on undefined Get Details A. It looks at the rise of the dollar with the twists, turns and luck it had to reach the incredible dominance it enjoys today. The book explores the mistakes China, Japan, Europe and even the former Soviet Union made, which led to the dollar gaining market share — it also explains the vulnerabilities that point to a more multipolar system in the future. Q. What are the threats to the US dollar? by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Villas For Sale in Dubai Might Surprise You Dubai villas | search ads Get Deals A. Externally, the promiscuous use of sanctions has led both Europe and China to want to decouple from the financial system going through the United States — both China and Europe are trying to develop their own ways of doing international transactions now. The dollar is not just dominant in trade, it is also dominant as a lot of back office work of the global financial system goes through the US. This gives the US its incredible ability to impose sanctions, which it has on many countries. The dollar peaked 10 years ago — but two factors have now accelerated things. First, the US is taking on unsustainable debt — this applies to both our political parties. This will eventually lead to some form of debt crisis, high inflation, financial repression and possibly even partial default to some foreign countries. Everyone can see this — with Donald Trump, it's become more apparent. The second factor is both parties being unhappy at the independence of the Federal Reserve — this is at the heart of the whole system and gives stability for inflation but our politicians are clearly displeased at that. I think there is therefore a steady breaking away from the dollar — this is likely to accelerate if these problems grow worse. It's quite possible the US will have a budget crisis in the next four to five years — this means long-term interest rates will keep rising and politicians will finally be unable to take the heat. Live Events Q. If the dollar fades, which currency will replace it? A. None — the dollar will lose market share. The title of my book comes from 1971 when the Richard Nixon ad mi nist ration decided to stop offering to convert dollars to gold for governments. Europe was then the centre of the dollar bloc — today, Europe is gone. I think Asia will be the next part that is lost. Europe has a single currency which Asia won't have but it will likely become more centred on the Chinese yuan in the next decade. In Africa and Latin America, Europe will gain market share — before the European debt crisis, it had a quarter of global reserves. That fell to under 20%. I expect that to rise and see the Euro used more in global trade, particularly as the Europeans develop new digital currencies. Q. What are the likely economic outcomes of Donald Trump's tariffs for America? A. In the next couple of years, we could see slower growth, also because the taxes apply to intermediate inputs. It could make things more expensive and lower quality, which happened with the tariffs Trump established in his first term — those led to price increases and lower standards. You can't buy a washing machine in the US today that's as good as something from 10 years ago, thanks to those tariffs. What is remarkable is the extent to which Trump has succeeded in imposing tariffs on the rest of the world without retaliation — don't expect that to last. Countries will bide their time and if the US carries this on, the rest of the world will not just turn the other cheek — nations will retaliate. Trump has made all kinds of threats on security, etc., but I doubt he can hold it all together. From his perspective, his first round of negotiations has been remarkably successful — he did exactly what he said he would do and it's almost laughable to hear the Europeans say they got a good deal because the tariffs on them are 15%, not 30%, or that Japan not only accepted higher tariffs but lowered these on American goods and agreed to invest billions in the US. I don't think this is a sustainable situation. As political theatre, it's extraordinary and the President has succeeded in his ambitions — but the tariffs will not benefit the US. Tariffs hurt the country imposing them more than others. Even if he halts now, the world should know this is not the end — this is a ceasefire. As soon as, say, India does something Trump doesn't like, he will threaten a much higher tariff — but, by then, countries will learn to respond differently. Currently, Trump thinks he's triumphed. We haven't had a recession in the US and prices haven't risen much — but that could change. Q. As a chess grandmaster yourself, how do you analyse India's rise — and China's performance — in global chess? A. India's success is the story of the decade — India has several of the top ten chess players in the world, including the current world champion on the men's side, with women also moving towards the same swiftly. It shows India's remarkable talents in science, math and technology. It shows a level of excellence India should be proud of, beating China and surpassing the US. This is an important marker of India's rise. China has done well, particularly in women's chess — it's had a world champion for some time but that was more of a fluke. China just has less enthusiasm overall for chess than India. The Communist Party isn't interested in it — chess hasn't taken root there like it has in India. Views expressed are personal
