StatsGuru 09-October-08

the ink has barely dried on the $700-billion US bailout package and experts are already estimating the damage to the global economy could be double that. The IMF Global Financial Stability Report has, in the space of five months, upped its figures from $945bn to $1,400 bn. Since banks have raised just around $350bn so far, there’s a long way to go — while capital will have to be raised at higher spreads, SWFs are no longer as keen to invest (see Perspectives). This implies considerable deleveraging and slowing of acquisition of new financial assets. IMF projections see US/Euro credit growth recovering slowly only after December 2009. Not surprisingly, the IMF’s World Economic Outlook slashes global growth estimates a fourth and predicts near-stagnant GDP for a full year more for the US and the Euro area. India remains a bit of a mystery with exports and company sales still looking healthy though the IIP shows a steady decline. With inflation softening, monetary policy is easing. Higher deficit will lower savings and increased emerging market spreads will add to the problem of raising funds for fresh investment. The IMF has lowered its India 2009 GDP growth projections by a seventh.

 

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