A slowdown in the US could affect various sectors, not just India’s services sector. The service sector is a major component of the country’s GDP. A recession in the US can also cause a lot of volatility in bond and equity markets. In an interview given to NDTV, Axis Bank’s Chief Economist and part-time Chairman of Unique Identification Authority of India Neelkant Mishra clarified this. Mishra said that he expects America to enter recession this year itself.
Rising bond yields and 10-year high consumer borrowing rates will soon weigh on US money supply and consumer demand. Mishra points out that this will be a challenge for the country. Factors that helped the US avoid recessions in the past are disappearing.
Declining consumer demand will also cause corporate earnings to decline. DSP has released a report that this may cause stocks to fall. High interest rates and high oil prices are a setback. The US fiscal deficit is soaring. A stronger dollar has delayed the recession, but there are strong signs that the US is headed for a recession.
At the same time, most of the emerging markets are in the grip of recession, said Manish Danchi, founder of Macro Mosaic Investing. A warning that terrible times are ahead. Rising energy prices, China’s balance sheet and the value of the dollar will also affect Asian and European markets. Danchi says this will be evident in the next few months. The warning is that the slowdown will be evident in the next six months to 12 months and this will affect the stock market in India.