Nomura said a large increase in trade tariffs would be inflationary for the US economy and could lead to a recession. Robert Subbaraman, head of global macro research at Nomura, says that higher prices will reduce consumer demand and increasing uncertainty will force businessmen to reduce their investments.
Subbaraman said, ‘There is going to be a sharp decline in America’s growth rate, which will be close to recession. Our forecast does not see a recession at this time. But it is very close to recession. Therefore, for America we have estimated a growth of 1.4 percent for the entire year. Before April 2, our estimate was 2 percent. But now we have reduced it.
Subbaraman said the Federal Reserve would not rush to cut rates as it would wait until it was clear that the worst of inflation was over. Perhaps the US central bank will cut rates only by December.
The brokerage said that it has estimated India’s GDP to be at 5.8 percent by the end of FY 2026, taking into account the direct and indirect effects of trade tariffs. Sonal Verma, managing director and chief economist at Nomura, said, “We agree with the view that inflation is not a challenge, so it is expected that it will remain around 4 percent this year.” But the brokerage said it was facing concerns over trade tariffs and other global challenges.
There is a possibility of a cyclical recession in the short term.
“We are seeing pressure on the domestic balance sheet,” said Aurodeep Nandi, executive director and India economist at Nomura. We have low real incomes, especially in urban areas. The private capital expenditure cycle is struggling. That’s why even before the Trump tariffs, our actual GDP growth projections were low. We had estimated a growth of 6 percent for the financial year 2026, which has now been reduced to 5.8 percent.
Nomura has predicted that Nifty will give returns in single digits below its current level. The brokerage has set a target of 24,970 for Nifty by March 2026, which indicates an increase of just 3 per cent from Thursday’s close (24,247).
First Published – April 24, 2025 | 11:09 PM IST
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