Global rating agency, S&P Global Ratings in its latest report ‘APAC Economic Snapshots July 2018′ has expressed concerns that India may face capital flow pressure on the back of trade issues and higher US interest rate. However, the agency noted that capital flight risks are more moderate this year compared with 2013, when markets globally responded sharply to the US Fed’s slower quantitative easing.
Further, highlighting strong macroeconomic growth momentum of Asia-Pacific region despite trade tensions, S&P said that India’s economic data continue to be positive overall, with purchasing manager indices are above 50 and trending upward. The rating agency also underlined accelerating credit and trade growth along with stabilized rupee in recent weeks. However, it pointed that rising oil prices are impacting the overall external balance and pushing higher inflation.
Besides, S&P Global said that ongoing global trade tensions are the key risk for the region’s economic growth and welfare stems. It added that the US continues to expand the tariff net on China and other trading partners, who would then retaliate against US trade measures and this could lead to slower global growth and reduced welfare for consumers.