Arcane Market Is Next to Face Big Credit Test

Beginning with the housing crisis, the United States economy has been heading into a recession, with the employment situation turning gloomier than ever over the last month. The United States being the global engine, the IMF has lowered its forecast of global growth this year from 4.9 per cent to 4.1per cent.

This inevitably raises the question of how India will fare through such a widespread slowdown.

The optimistic line comes from the ‘decoupling' school, which points out that, unlike the European economies, which are completely interlocked with the US, India is capable of decoupling itself. This is countered by the ‘recouplers', who argue that, since India's links with the US are no longer through a thin line of trade alone, but through massive interactions in the services sector and large financial flows, India should brace itself for a sharp comedown from the 9 per cent annual growth that it got used to in recent years. read more