Moneycontrol
Last Updated : Aug 24, 2018 10:04 PM IST | Source: Moneycontrol.com

Raghuram Rajan warns of mix of harmful macros impacting global growth

Rajan said that while global growth has been strong in recent years, the concern remains as to how long it can sustain and whether the raised asset prices are justified on the basis of it

Moneycontrol News @moneycontrolcom

Former Reserve Bank of India Governor Raghuram Rajan has cautioned that a combination of trade wars, an increase in debt and high asset prices could drag global growth down, according to a report Bloomberg.

"We are all very well aware that two things have built up, which had built up before the previous crisis, leverage and asset prices," Rajan was quoted as saying in an interview to Bloomberg Television on Thursday.

"Trade is an issue for the world to be concerned about. It is extremely important that we have good outcomes there. By all means negotiate, but don't pull the nuclear trigger there," Rajan said.

Rajan reportedly said that while global growth has been strong in recent years, the concern is how long it can sustain and whether the higher asset prices are justified on the basis of it.

The economist made these comments at Jackson Hole, Wyoming, which is the same place where he had first warned about a credit crisis back in 2005.

The former RBI governor said that recent decisions by US and China on trade threaten global growth at a time when underlying conditions are fragile, and some emerging market nations are highly levered, the news agency reported.

US and Chinese negotiators ended two days of meetings without breaking a deadlock over trade that has unnerved financial markets and disrupted global commerce.

The lack of progress during the talks has increased the risk of the dispute getting escalated.

The Trump administration had in July slapped tariffs on an initial $34 billion on Chinese products, and Beijing responded in kind.

The US is preparing tariffs on $200 billion more on Chinese products, and China has vowed to counterpunch by targeting $60 billion in American goods.

Speaking about the recent fall in the Indian rupee, Rajan said that the decline isn't too worrying and that it is largely attributable to the strength in the dollar.
First Published on Aug 24, 2018 03:59 pm
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