In an interview to CNBC-TV18, Arnab Das, Roubini Global Economics says that Indian economy's condition does not look good for the next 6-12 months. US economy is recovering and it will result in outflows from EMs like India.
The economic scenario in the emerging markets (EMs), especially India does not look good for the next 6-12 months, believes Arnab Das of Roubini Global Economics. Weak rupee and large outflows from the economy are affecting macro policy and macro performances, Das told CNBC-TV18. The market will see a strong headwind as a result, he adds.
On the improving conditions in the US economy and the possibility of tapering of quantitative easing, Das says, “The tide is turning a bit against EMs in favour of the US and also US relative to other developed countries.”
Monetary conditions in different countries will eventually tighten over a period of the next couple of years. Meanwhile, major central banks of Japan, UK and Europe are still in easing mode, he says. This divergence that the global economics are setting themselves up will be the key driver in the times to come, he adds.
Below is the edited transcript of his interview to CNBC-TV18.
Q: What is your sense of how to approach the global set up now? Most of these markets like the United States (US) are still sitting at record highs. But what would the way forward look like?
A: There is a lot of traction. There is a bit of holding period, holding pattern even though some important things have happened. The Japanese elections in the upper house took place and Shinzo Abe and his party has a decent size majority; although it is not a slam-dunk. We will have to see how that pans out for structural reform for Japan.
The message from the G20 meeting was that there should be more communication and more coordination as exit strategies takes place. These two things tell us really about what is going on in the world. The US is however, very gradually and maybe with better and more communication, is now heading for an exit.
So, monetary conditions will become progressively less easy and then eventually tighten over a period of the next couple of years. Meanwhile in other places around the world, the other major central banks are still in easing mode whether it is Japan, United Kingdom (UK), or the European Central Bank (ECB).
So, there is a divergence that is setting itself up gradually in different parts of the world. It will be the main driver, maybe not today or tomorrow. But the bigger picture that is what is going on.
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