Even if the world economy looks as strong, it does not necessarily have to translate into equities performing just as well as past 12 months, said Jim O'Neill, Former Chairman, Goldman Sachs Asset Management.
Jim O'Neill, Former Chairman, Goldman Sachs Asset Management in an interview to CNBC-TV18 shared his thoughts on the global economy and the outlook going forward.
The global markets so far have risen in a synchronized manner.
According to him, although all global markets rising at the same time without discriminating fundamentals of different countries, suggest that one needs to be careful but at the same time world economy is probably the strongest it has been in 11 years.
"Top ten economies of the world, with the exception of UK are all participating at the same time," he said, adding that finally after the mess of 2007-2008, the world looks like a better place.
He said, if he were to look at the same set of indicators that he used to earlier look at, they are all very strong – for example South Korean trade data looks good, PMI surveys of many places looks strong, world appears to be strong and accelerating and so unless there is some major new shock or tightening of policy by Central Banks, the indicators will stay strong.
Certainly, right now the consensus forecast for the world economy can get stronger, said O'Neill.
Even if the world economy looks as strong, it does not necessarily have to translate into equities performing just as well as past 12 months, he said adding that if we carry on with this trend, we may get more Central Banks other than the US Fed deciding not to be so accommodative.
However, we need not worry about rate hikes in the first quarter.
When asked about his expectations from the Union Budget in India, he said with the earlier reforms like GST and demonetisation slowing down growth, it is unlikely that the government would announce any big surprises in the Budget.
In fact, one would like to see more efforts being made to improve manufacturing growth in India. The government has said that it would like Make in India but the policies will have to encourage that, he said. India could open up foreign investments into key sectors like China did rather than thinking of foreign companies as a threat.
Spending on education is also required, he said.
On commodity front, he said the rise in oil prices has further legs to go and going forward with supply coming in they could again correct but guaranteed that they would never be stable.For full discussion, watch video