Global Slump

Global Slump

Assignment 1
Global Slump Boom for India Only if it Does Not Get Worse
The renewed crisis of confidence in global economy could well benefit India if it does not blow up into something bigger.   Together with China India will stand   out as an island of growth in an otherwise bleak global economic landscape, helping it attract more capital flows & investments.
Recent evidence points towards a moderation in global growth as the developed world is struggling   with debt & unemployment& the emerging markets are fighting inflation by sacrificing growth.
Search for returns is likely to send investors scurrying to India, expected to expand at 8% in 2011-2012 while the rest of the world sees a moderation in growth to 3.2% during 2011.
India’s relative insulation from the rest of the world is another tick mark in its favour. Exports have a small 13% share in GDP, though rising fast at over 30% after the financial crisis,& its public debt   is mostly   internal. Public & private consumption combined has a 70% share in India’s GDP.
FDI inflows are expected to recover with acquisition s as an attractive option for investors. A pick up is always evident with $ 7.79 billion inflows in first two months of 2011-2012 fiscal.
Weak global demand will also keep commodity prices low, benefiting India that is exposed to imported inflation because of high reliance on imported crude & inputs.
Domestic consumption demand has been growing at plus 8 % since 2007-2008 in India. Also, the recent diversification of export destinations to MENA (Middle East & North African) Latin American countries will limit the impact of a slowdown in demand from traditional markets on Indian exports.
India’s Exports rose over 30% in 2010-2011 despite softness in the world’s largest markets.
But   a deep crisis will singe all , including India because of its   reliance on capital inflows to fund its current   account   deficit, pegged at around 2% of GDP , 2010-2011...