The United States is likely to be hit by a recession in 2007 and that event will have an impact on most global economies, warns Michael Spence, a 2001 Nobel laureate in economics."Recession in the US will affect everyone but we are hoping that we will be able to get out of it in five years time," Spence told members of The Associated Chambers of Commerce and Industry of India (Assocham) at an interactive session here today. India can however try and sustain its current economic growth rate of 8%, if the policy makers continue the reform-oriented approach. India will further need to leverage the global economy to have a 7% plus growth rate. "India has a large domestic demand which is driving the growth rate but even India will have to leverage the global economy. No nation since the post world war period has pulled off over 7.5% growth rate without leveraging other economies," Spence said.The volatility in crude oil prices will continue even though they have started softening. In fact, the international crude oil prices might even go up to $80 a barrel until collective measures are taken to contain the element of volatility in the oil prices, Danny Leipziger, VP of World Bank, said.While commenting on the Indian growth story, Leipziger said the current high growth rate of the Indian economy was an indicator of prosperity and happiness. "The potential for Indian economic growth is very high provided the government addressed certain issues like flexibility in the labour laws, infrastructure development and fiscal adjustments. Addressing these issues might however take time under the current political climate," he said.
