India’s Note Ban Is ‘Highly Disruptive’, Says IHS Markit Chief Economist
Emerging markets expected to see better growth this year but India may be an outlier: IHS
India’s move to demonetise high-value currency notes may have been well-intentioned but its implementation was highly disruptive, says Nariman Behravesh, chief economist of data and information firm IHS Markit. He was speaking to BloombergQuint’s Menaka Doshi on the sidelines of the World Economic Forum’s 47th annual meeting in the Swiss ski resort of Davos.
I understand the motivation but on the other hand the way it was done was highly disruptive, unnecessarily disruptive. Sometimes the goals are great but the implementation is not so good. This is one of those cases.Nariman Behravesh, Chief Economist, IHS
He expects the cash crunch to hurt India’s growth in the short-term. This would make the the country an outlier in the emerging market basket which is expected to see higher growth compared to last year.
Growth in the U.S. will be boosted by President Elect Donald Trump’s proposed stimulus plan – in the form of tax cuts and higher infrastructure spending, he added. IHS expects the U.S. economy to grow by 2.3 percent in 2017 and 2.6 percent in 2018. Rate hikes by the U.S. Federal Reserve and a stronger dollar may offset growth to an extent but that doesn’t leave Behravesh “terribly worried”.
According to him, Trump’s plan to build a wall on the Mexico border is unlikely to fructify but he does not rule out some tightening of border restrictions. In fact, he expects most of Trump’s protectionist tendencies to be tempered, including his plan to impose a punitive 45 percent tariff on Chinese imports. But there will be strong-arming of companies not to outsource jobs or locate outside of the U.S., he said.
The Chinese President Xi Jingping’s speech at the World Economic Forum in support of globalisation, was encouraging in that he made commitments to allow more imports and foreign direct investment into China, as was his message to Trump against a trade war and a currency war, Behravesh added.