If there is no agreement with China, then we can see some real downturn in economic activity on a global scale, Peter Cardillo, Chief Market Economist, Spartan Capital Securities, tells ET Now.
IMF has cut the global growth forecast for the first time in two years. What is your view?
This might be just the beginning of a series of cuts going forward. Trade disruptions are going forward. Trade disruptions are going to take a toll of the global economy. I believe that we are going to see a cut in US economic activity also. The longer the trade disruptions continue, the greater will be the increase in economic slowdown.
The key is how long the trade disruptions continue. In certain respect, it might be a wakeup call for the United States and of course its trading partners to make deals. I suspect we are probably going to get a deal out of China by year end and of course that would be the key. If there is no agreement with China, then we can see some real downturn in economic activity on a global scale.
Do you think there will be ripple effects on India?
All the emerging markets are going to get hit by trade disruptions. There will be those countries that will get hit less and perhaps have a softer economic environment as opposed to the countries that will have a more negative impact on economic activity.
As far as India is concerned, things probably will slow down but percentage wise, a slowdown may actually hit China. I would say that India is not going to probably get hit as hard as China.
Would India benefit as a result of the ongoing trade war or would it also be a victim?
Nobody benefits from a trade war. Everyone just gets hurt somewhere along the line. As I said, some countries will be hit less hard than others. India probably would have less of a severe impact but nonetheless there will be some sort of negatives attached to tariffs and there will be impact on trade deals between United States and India.
IMF cutting global growth rate could be a wakeup call and might induce everyone to sit at the table and to work out some sort of trade deals.