Mark Matthews, head of research Asia at Julius Baer, shared that the recent US tariffs will not significantly affect India’s economy. He explained that trade with the United States makes up only 2% of India’s total GDP. This means the direct impact on growth will likely be minimal.
However, Matthews noted that while the GDP may stay stable, market sentiment could take a hit. Tariffs can cause fear and uncertainty among investors, which may lead to reduced investments and capital inflows into India.
He also warned that the US dollar may continue to strengthen over the next two months. A stronger dollar generally puts pressure on emerging markets, and this trend could weigh further on Indian markets in the short term.
Matthews mentioned that US officials are expected to visit India in the last week of August. He also said that former President Donald Trump usually makes harsh announcements early but finalizes trade deals that are less severe. This pattern could repeat in the current situation.
Talking about Russian crude oil, Matthews pointed out that India is the third-largest buyer of Russian oil, after China and Turkey. Trump has warned of possible action if India continues these imports. However, Matthews believes India can manage well even without Russian oil, as global oil supply is currently abundant.
Looking ahead, he expects the US dollar to decline by 5% to 7% over the next 12 months. This would be a positive sign for emerging markets like India, making them more attractive to foreign investors.
Finally, Matthews compared the current market situation to the year 2022. He predicted that after a five-week decline, the Nifty index may see a strong recovery. He believes the IT sector could benefit the most if relations between the US and India improve in the coming months.
