HONG KONG: “India seems very flexible as it will probably see some depreciation which could help the GDP growth rate," says Jim Walker, managing director of Asianomics in an exclusive interview to Bloomberg UTV.

“I think a 7.2% growth is very achievable, maybe even 7.5% like the RBI suggests. I’m worried about next year’s forecast,” he adds

Speaking on rupee and dollar, he says, “India is much more flexible on the exchange rate. One can see some depreciation on the rupee to the dollar but this isn’t a bad thing. Equity prices will be vulnerable but in terms of liquidity it is good. Weak commodity prices are a good sign for India.”

Discussing the Eurozone crisis, he says, “The problem area is Spain, it is half the size of Germany and in as much trouble as Greece. Housing and construction market there has collapsed. Europe is in deep trouble and one will feel a huge drag in the years to come.
It’s a re-run of Asian crisis from the 1990s but it basically is an EU crisis.”

He adds, “They need to devalue but it'll be difficult because of them being pegged to the euro. No reason why people should be more comfy in EU currency than in dollar because problems in EU are much more widespread.”

Speaking further on credit contracting he adds, “Credits are already contracting in Europe and are still highly over leveraged. One should expect to see the banking system further drawing in its horns.”

“It’s good news for the dollar though as risk aversion increases, the dollar will see a lot of attention and will go significantly higher,” he says.