After the catastrophic 2007 and 2008, the World Economy is limping back to normal. However, the impact of what was termed as ‘the worst recession since the 1930s’ was lesser than expected and consequently, the signs of recovery are visible much earlier than predicted. So, what is pulling the world out of this economic swamp? The answer is the ‘Emerging Economies,’ particularly India and China.
Much of this comeback by these economies is attributable to the strong fundamentals, low ‘reckless’ institutional credit exposures, and timely rectification measures. Dismissing the previous estimates of less than 5% GDP growth rate by the IMF and other agencies, India is slated for a growth of close to 6% as per the latest figures. The rate of ‘contraction’ in Indian exports has been falling steadily, from 39.2% in May 2009 to 13.8% in September 2009.
India has an advantage over the export-led China (40% of the GDP) through it moderate export dependence (23% of the GDP). This, in addition to the huge market potential and rural demand, helped India ride over the recession with relative much greater ease. A September 2009 economic survey report, ‘UK Trade and Investment (UKTI) Report,’ prepared in association with the Economist Intelligence Unit, reveals India among the most preferred investment destinations for the European Union.
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