PROBIZ International - Vol-1 Probiz File final | Page 15

The economists
believed that such
protectionist measures
would undermine the
multilateral trading
system governed by WTO
rules.
Participating
economists were of the
view that more than
the absolute results of
trade war, the prevailing
uncertainties might
cause market disruptions
and negatively impact
the overall sentiment.
The respondents felt
that imposition of higher
import tariffs could
trigger inflationary
pressure in the US,
which in turn can have
repercussions on Indian
stock and currency
markets. In fact, the
stock market is already
witnessing some
correction.
Economists opined
that exports are likely
to bear the brunt
and export-oriented
industries particularly
MSMEs from sectors like
iron and steel, machinery
and metal products,
chemicals and agricultural
goods are likely to take a
hit. There are possibilities
of an unexpected
interruption in the global
supply chain.
Nonetheless on the
positive side, the looming
trade war also has the
potential to open up new
avenues for India.
US and China are
major trade destinations
for each other. Some
of the participating
economists were of the
view that imposition of
tariffs by each country on
the other’s commodities
opens up opportunities
for India to boost its
exports particularly in
the labour-intensive
sectors such as clothing,
footwear and electronics.
India can also focus on
deepening bilateral trade
with its key trading
partners to limit the
impact of protectionist
policies.
VIEWS ON OPPORTUNITIES AND CHALLENGES FROM INTRODUCTION OF DIGITAL CURRENCY
The economists
participating in the
survey broadly agreed
that introduction of a
fiat digital currency will
be a step in the right
direction. Citing various
advantages, economists
said that digital currency
will provide an easy
and efficient way for
instant global electronic
transactions, prevent
counterfeiting and
reduce printing and
administrative costs
substantially. It will also
benefit by bringing about
wider financial inclusion,
enhancing market
stability and providing for
better record keeping
and monitoring of
transactions. Elimination
of financial intermediaries
in digital transactions
will reduce transaction
costs. The participants
cited examples of some
major countries like US,
China, Russia, Japan and
Sweden as well as of
some emerging market
economies like Venezuela,
Estonia and Uruguay
that are already working
on a digital currency
framework.
Nonetheless,
participating economists
cautioned that even
though the concept
of digital currency is
promising on several
fronts, introduction
of the same requires
detailed discussion.
Economists felt that fiat
digital currency could
pose a threat to privacy
and security concerns
need to be safeguarded
first. They called for
careful consideration
and discussions before
implementing any such
arrangement.
VIEWS ON MACROECONOMIC AND FINANCIAL SECTOR RISKS
The year 2018 started
on a positive note for the
Indian economy. However,
there are several
challenges that remain
on the horizon such as
elevated crude oil prices,
increase in protectionism
and difficulties that
plague the domestic
banking system to
mention a few. In this
scenario, economists
were asked to share
their assessment of
macroeconomic and
financial sector risks for
remaining part of the
year.
Majority of economists
opined that despite
certain macro-economic
parameters (healthier
manufacturing growth,
investments, demand
etc.) pointing towards
signs of optimism; risk
factors continue to
remain on the anvil.
Economists were
broadly in agreement
on the listing of major
downside risks that
envelop the economy.
The participating
economists point