Whilst the possible sharp slowdown of the Chinese economy still remains a significant risk for the global economy and our region, there are newer challenges arising from uncertainties that have to be
Whilst the possible sharp slowdown of the Chinese economy still remains a significant risk for the global economy and our region, there are newer challenges arising from uncertainties that have to be anticipated, like possible moves by the US Fed, a potential rebound of oil prices, possible Brexit, geopolitical risks in the Middle East and volatility in financial markets due to risk-on or risk-off sentiment.
Addressing members of the Saarc region on the impact of the Chinese slowdown on the region RBI governor Raghuram Rajan said China is the world’s largest trading partner, largest exporter and second largest importer in 2014, “so it is clear that a slowdown in China will effect the global economy including the Saarc region.
He however assured the region that “India was conscious of the role its economy played in the region and the objective of securing and preserving macro stability is at the top of the agenda.”
Despite the growing uncertainty, he said the Saarc region was the fastest growing among emerging and developing economies.
“We look forward to a strengthening Indian eco-nomy as recent structural reforms take hold, and hope that some of this growth will spill over to your economies. In turn, we hope to be benefited as your economies pick up,” he said.
Referring to the question of why underlying industrial growth has slowed in recent years is still being debated, the answer probably lies in the hard-to-understand effects of population ageing and productivity slowdown.
While stronger global gr-owth may be just around the corner, as the IMF has anticipated every year in the last few years, it may yet be some time in coming, he said. So China will have to undertake the needed policy adjustment from an exporting economy to a domestic economy, without the tailwind of global growth, he said.
