Raghuram Rajan warns of 'policy uncertainty' for world economy

In an interview to CNBC, Rajan said the 'good news is some of the fears about the (Trump) administration that it would move immediately to a more protectionist stance haven't played out'.

PTI April 21, 2017 14:05:41 IST
Raghuram Rajan warns of 'policy uncertainty' for world economy

New Delhi: Former RBI governor Raghuram Rajan today warned of "policy uncertainty" for the world economy due to there being a "bunch of new leaders" who need to prove they are strong, even as he exuded confidence about all large economies doing well.

Raghuram Rajan warns of policy uncertainty for world economy

Former RBI Governor Raghuram Rajan. PTI

Without specifically mentioning India, Rajan said, "This is the first time in a long while we have seen all the big engines firing at the same time including the large emerging markets ... We have seen trade picking up.

"We are seeing early signs of investment intentions. Of course there are always clouds. There are clouds this time also," he said.

In an interview to CNBC, the Chicago Booth School professor and the outspoken economist also said the "good news is some of the fears about the (Trump) administration that it would move immediately to a more protectionist stance haven't played out".

"There have been noises but of course the strong action that some people feared against Mexico, against China hasn't really materialised. That's the good news," he said while referring to Donald Trump administration in the US.

Talking about the possible risks before the world economy, Rajan who served as RBI governor for three years, said, "There is lot of policy uncertainty right now because of the work the (US) administration is going to do and how much it can achieve.

"But also there is geo-political risk. We have a bunch of strong leaders around the world who are already well entrenched in their strength.

"We have a bunch of new leaders who need to prove themselves that they are strong. And in that kind of environment, who has room to back off if in fact there is a confrontation. We have many areas of confrontation."

Rajan further said as the US monetary policy normalises, "we will see more stress" on heavily indebted entities.

Updated Date:

also read

Watch: China's subway passengers trapped in waist-deep waters as deadly floods sweep country
World

Watch: China's subway passengers trapped in waist-deep waters as deadly floods sweep country

In the viral videos, commuters are seen battling for their lives in more than waist-deep floodwaters on a subway train

China floods: Toll rises to 33 as flash floods force thousands to evacuate from Henan province
World

China floods: Toll rises to 33 as flash floods force thousands to evacuate from Henan province

The torrential rain has affected about three million people in Henan province and a total of 376,000 local residents have been relocated to safe places, the provincial emergency management department said

Xi Jinping meets top military officials in Lhasa
World

Xi Jinping meets top military officials in Lhasa

Xi made his first visit to Tibet as President from Wednesday to Friday. But his important visit was kept under wraps by China's official media till the end of the tour on Friday due to the sensitivities of the trip