Filippo Gori, head of markets & investor services at JPMorgan Asia Pacific, spoke to CNBC-TV18 about the simmering trade war and its implication on the emerging markets.
“It is a lose-lose situation for both countries and whether it is going to spiral out of control and create bigger problem for emerging markets (EMs) asset class is too early to call,” Gori said on the sidelines of JPMorgan India Investor Summit.
According to him, India could benefit from trade war because it remains immune from that pain.
“EM as an asset class overall is feeling the heat of the rising rate scenario in the US and current account deficit (CAD) countries are suffering more,” Gori said.
According to Gori, the year 2017 was about synchronized global growth but 2018 has seen decoupling.
"While the US economy is growing strongly, Europe and some other economies are having problems and within EM the CAD countries will suffer, while countries with surplus will do better," he said.
"However, it is too early to say if there is overall capitulation of EM trade," said Gori.
With regards to the Indian currency, he said, "The INR would remain around 72 to the dollar up to June next year. There are two hikes coming from the RBI – one is October and other in December and possibly the government will defend the currency strongly even inter-meetings."
According to Gori, the economic fundamentals of India remains very strong and he expect 7.3 percent GDP growth next year, putting India as the fastest growing economy.
“Investors will keep a watch on fiscal profligacy in India and investors would want to see fiscal orthodoxy in the election year,” he said, adding that they were not looking at a doomsday scenario for India.
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