He added, “I think the stick of tariff will be on our head for the rest of the term of Trump. It’s not an April 2 event. It will just be back and forth.” He added tariffs are inevitable.
While acknowledging President Trump’s firm belief in tariffs as a powerful tool, Baig cautioned against expecting a lenient stance.”I cannot accept the lenient part of the promise,” he stated, arguing that Trump’s conviction in tariffs for revenue generation, bringing manufacturing back to the US, and as a negotiating tactic makes a significant softening unlikely.
Despite the policy-induced uncertainty, Baig doesn’t currently foresee an imminent recession in the US. He noted that while some indicators like first-quarter GDP might appear weak due to pre-loading of imports, other data points such as payrolls and real wage growth remain relatively robust.However, he warned that the high level of uncertainty is likely to lead to businesses postponing investments and consumers delaying large purchases, which could negatively impact medium-term growth.
While acknowledging some positive signs in the housing market due to slightly lower interest rates, Baig placed himself in a “slight mild soft stagflation camp” rather than predicting a full-blown recession.
Shifting focus to the Indian market, Taimur Baig expressed a “cautiously optimistic” outlook for growth in 2024-25 (FY25) and beyond, projecting around “6.5% growth.”
While acknowledging some weakness in the informal and rural sectors, he sees positive momentum from improved animal spirits in the equity market, potential for increased capital formation, and favourable fiscal revenue collection.
On the currency front, Baig anticipates a strengthening of the Indian rupee. He explained that countries actively engaging with the US and accommodating its demands might see their currencies appreciate against the US dollar, driven by the US objective of weakening its own currency to boost competitiveness.
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(Edited by : Unnikrishnan)
