The rest of the world tends to catch cold whenever the United States has a cold. Nevertheless, even though the data showed that the economy of the United States contracted overnight, the domestic market increased by more than one per cent, extending its winning streak to a third consecutive trading session.
The fact that the economy of the United States has entered a period known as a “technical recession” is not good news for India or the rest of the world.
However, analysts said that one should not read too much into the GDP print because other data points in the world’s largest consumer economy still suggest resilience.
If anything, the GDP print might convince the Fed to cut down the speed at which they are increasing interest rates. This would be a positive development. [Further citation is required]
As a consequence of these numbers, it is possible that the value of the dollar will decrease in the near future. The Indian rupee would heave a sigh of relief as a result of this, and the flow of cash from abroad equities markets would be temporarily halted as a result of this.
According to the opinions of economic analysts, it is inevitable that India and other emerging economies will suffer a setback if the predicament in developed economies continues to deteriorate.
“A lower GDP for the United States equals an economic recession, which equals fewer rate hikes from the Federal Reserve, which equals a lower terminal rate, which equals buying stocks.
This obscure line of reasoning is going to be put to the test at some point in the foreseeable future, but not just yet “Jeffrey Halley, Senior Market Analyst for the Asia Pacific at OANDA, was quoted as saying.
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Following a drop of 1.6 per cent in the previous quarter, overnight data revealed that the real GDP of the United States fell by 0.9% in the June quarter. This result was significantly lower than the consensus expectation of growth of 0.4%.
“the commencement of a technical recession signifies the beginning of a second consecutive quarterly loss in real GDP,” stated Nomura India.
“The beginning of a technical recession marks the beginning of a technical recession.” There is a correlation between the beginning of a technical recession and the beginning of a technical recession.
In contrast, the formal declaration of a recession necessitates the presence of broad weakness across a variety of economic indices, such as labour markets, industrial production, and others. Only then can a recession be considered to have occurred.
According to Nomura, “Moreover, considering the upcoming annual revisions to GDP data from Q1 2017 through Q1 2022 on September 29, as well as an expected resilience of gross domestic income (GDI) in Q2 2022, we would caution against putting too much weight on the technical recession, based on the current real GDP series.”
