The US crisis has now spread to Japan and Europe. Japan’s economy is shrinking. The mood in Germany is less buoyant. The US continues to live out the shallow-but-long recession scenario. Now that the Olympics are over, the Chinese currency is mildly depreciating, exports are up and it looks as if the government will try and keep the economy on track — most projections, though, are growth will fall to around 9.5 per cent in 2009. The good news is that the global commodity spiral looks spent, leaving some room for expansionary policies. That said, it is not clear if global growth improving will start the spiral all over again. First-quarter numbers for India confirm the slowdown, driven by a halving of industrial growth. But while many believe next year will be better, it is likely the bad news will spill over. Analysts at Citigroup have been busy revising their estimates downwards, and those at Morgan Stanley believe investment growth, which has driven India’s GDP miracle, could fall to 2004-05 levels next year as companies, unable to raise funds, will hold off new projects.
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