Amid the recent tariff hike by the United States on imports, concerns are growing around global economy slowdown with experts warning about a likely recession.
If these tariffs are implemented in April as scheduled, they could leave a huge impact on global trade, supply chains, and economic growth, experts said.
Madan Sabnavis, Chief Economist at Bank of Baroda said the steeper tariffs in the U.S. have the potential to affect inflation and could slow down the easing policies of central banks globally.
He pointed out that while all central banks are currently focusing on promoting growth by lowering interest rates, an increase in tariffs could disrupt this process. He also highlighted that countries that are highly dependent on exports will face serious challenges, as their economic growth could be impacted.
He said, "Countries more dependent on exports will face challenges here as their growth will be affected. India being a domestic oriented economy will be buffered to a large extent on the growth front though will be impacted by sharp currency volatility".
Ajay Bagga, a banking and global market expert told ANI that the impact of U.S. tariffs could be severe enough to push major parts of the world into a recession.
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He explained that in today's interconnected world, production is spread across multiple countries. For example, raw materials may be sourced from one country, processed in another, and then assembled in different locations. Any disruption in this global supply chain could slow down economic activity and even cause negative growth in some regions.
He said ,"Could prove to be disruptive to the extent of tipping some regions into a degrowth and recession. The Atlanta Fed GDP Now number for the US itself for Q1 2025 is showing a negative print of - 2.4 per cent. This is the impact widespread tariff disruption could have."
As per experts, India, being a largely domestic-driven economy, is expected to be somewhat shielded from the direct effects of these global trade disruptions.
According to Madan Sabnavis, India's growth will be buffered to a large extent because its economy does not rely as heavily on exports as some other countries.
However, he warns that India may still experience sharp currency volatility due to global market uncertainty. This means that the Indian rupee could fluctuate significantly, which could create challenges for businesses that rely on international trade.
While as per the experts' view, it is too early to say with certainty whether the world will enter a recession, the risks are increasing. The U.S. tariff policy has created uncertainty in global trade, and if the proposed tariffs are implemented, they could slow down economies worldwide.
India may not be hit as hard as export-driven economies, but it will still need to navigate currency fluctuations and overall global economic uncertainty.
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