Jahangir Aziz, head of emerging markets economic research at JPMorgan, spoke to CNBC-TV18 about the world economy, the US-China trade talks and Indian macroeconomic data.
With regards to US-China trade issue, Aziz said, “At this point, both of them are at a point where the gap between their positions on non-trade, non-tariff issues particularly transfer technology are so far apart that it will take quite a lot of renegotiation to close the gap.”
"One does not know what the end game would be with regards to the trade war between US and China because they are two big sovereigns who are negotiating something where they have serious differences in their principle positions and it will take a long time for these positions to be actually negotiated."
“Our baseline still remains that you will probably continue to have status-quo prevail in terms of negotiations, which means current tariffs remain in place. However, if the tariffs increase then China will most likely retaliate, which will be very unpleasant for the global economy,” Aziz said on Thursday.
On the global economic recovery, Aziz said, "Already there is a significant slowdown in global capex and a trade war will put expectations of global recovery at risk in the second half."
Talking about the slowdown in Indian consumption, he said, "Contrary to consensus belief we think that the near-term, which is Q1, Q2 of this calendar year, looks much better than the medium-term that is 9-12 month on the back of a reasonable pickup in credit and investment."
"However, 9-12 months ahead into the calendar year India will run into a serious problem of a large and growing public sector borrowing, which sooner or later will push back the investment pick up that is currently happening. It could also lead to a stoppage in investment recovery or end up pushing Indian investors to go abroad to seek finance, which would lead to the widening of current account deficit."
When asked about India’s GDP data, Aziz said, “I do not understand CSO’s GDP methodology, I have very little understanding of MCA-21. I do not know why MCA-21 has to be a safe secret and cannot be released to the public.”