The recent stock market crashes in two most developing countries of the world – India and China, is just the icing on the cake. There have been a lot of developments in the past year, which threaten the existence of a peaceful, semi-utopian world. The decision by Democrats to raise the US debt ceiling at the last minute to prevent a default was an adrenaline shot to the dying economy. Fiscal stimulus and debt revisions are drug addictions for the economy on the whole, with no long-term positive effects.
This situation has just augmented the fears of a double-dip recession in the minds of many analysts and policymakers. Already, Europe is reeling under its own debt crisis with Greece, Ireland and Portugal in knee-deep waters. Austerity measures and high tax rates have paralysed the day-to-day life of citizens in these countries. Analysts expect that there is as much as 90% chance for Greece to default on payments, which would destabilise the Euro rate and in-turn cause global economy to go haywire.
Another economy which is recovering from a stygian abyss is Japan – the country with the worst stroke of luck. Although the devastation in Japan in 1945 catapulted it to its post-WWII growth story, it was a time when the US and Soviet Union were there to the guide the world. But in current scenario, it seems that the story is not quite the same. With no developed countries ready to take on the shock, we are through a rough patch.
The thing that troubles more than Europe and Japan is the US, with its dominance in the world economy. GDP of the US in 2010 was $14.7 trillion, approximately a quarter of the normal global GDP. US remains the largest manufacturer and service provider to the world. Any dent on the US economy would send shockwaves all over the world. As Russian President Putin has put it “The US spends beyond its means and lives like a parasite off the global economy”. Frustration with the US is self-explanatory for its behemoth share and contribution to the globe.
The reason for following all this so diligently is because this situation can affect me too, and since I am joining a “US based IT firm” in India this month end, I can’t stop thinking how this will affect my career path. Well for starters, Indian IT companies gain roughly 70% of its revenues from the US and the rest from Europe and other developing countries. Any spending cuts and austerity measures in the US will directly lead to lower spending and negotiations by the clients. Lower budgets for projects will lead to completion of the project pipeline and revenue crisis in the companies here. The natural option is layoffs, salary cuts and less hiring, which we have already experienced in the 2008 recession due to the collapse of Lehmann Brothers.
The domestic problems of high inflation and high interest rates have slowed industrial and manufacturing economy in India, and agriculture is bound to remain dependent on season. In such a scenario, the 8% growth figure is a distant dream for Indian economy. Coupled with a global shock, the implications will leave a scar in careers of many young like me.
I am no expert in economics; this is my naive analysis from TOI and Wikipedia. But one thing I can say for sure is that it’s time to develop the domestic economy. World Trade will always carry a risk factor .A decade has gone by and it’s not the Y2K era any more. It is time our generation builds up India to a level where we stand resilient in the trembling global economy.
This situation has just augmented the fears of a double-dip recession in the minds of many analysts and policymakers. Already, Europe is reeling under its own debt crisis with Greece, Ireland and Portugal in knee-deep waters. Austerity measures and high tax rates have paralysed the day-to-day life of citizens in these countries. Analysts expect that there is as much as 90% chance for Greece to default on payments, which would destabilise the Euro rate and in-turn cause global economy to go haywire.
Another economy which is recovering from a stygian abyss is Japan – the country with the worst stroke of luck. Although the devastation in Japan in 1945 catapulted it to its post-WWII growth story, it was a time when the US and Soviet Union were there to the guide the world. But in current scenario, it seems that the story is not quite the same. With no developed countries ready to take on the shock, we are through a rough patch.
The thing that troubles more than Europe and Japan is the US, with its dominance in the world economy. GDP of the US in 2010 was $14.7 trillion, approximately a quarter of the normal global GDP. US remains the largest manufacturer and service provider to the world. Any dent on the US economy would send shockwaves all over the world. As Russian President Putin has put it “The US spends beyond its means and lives like a parasite off the global economy”. Frustration with the US is self-explanatory for its behemoth share and contribution to the globe.
The reason for following all this so diligently is because this situation can affect me too, and since I am joining a “US based IT firm” in India this month end, I can’t stop thinking how this will affect my career path. Well for starters, Indian IT companies gain roughly 70% of its revenues from the US and the rest from Europe and other developing countries. Any spending cuts and austerity measures in the US will directly lead to lower spending and negotiations by the clients. Lower budgets for projects will lead to completion of the project pipeline and revenue crisis in the companies here. The natural option is layoffs, salary cuts and less hiring, which we have already experienced in the 2008 recession due to the collapse of Lehmann Brothers.
The domestic problems of high inflation and high interest rates have slowed industrial and manufacturing economy in India, and agriculture is bound to remain dependent on season. In such a scenario, the 8% growth figure is a distant dream for Indian economy. Coupled with a global shock, the implications will leave a scar in careers of many young like me.
I am no expert in economics; this is my naive analysis from TOI and Wikipedia. But one thing I can say for sure is that it’s time to develop the domestic economy. World Trade will always carry a risk factor .A decade has gone by and it’s not the Y2K era any more. It is time our generation builds up India to a level where we stand resilient in the trembling global economy.
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