Although a recession in the developed world is now more or less inevitable, China, India and some of the oil-producing countries are in a very strong countertrend. So, the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.If you accept this, then it follows that what we are seeing in the Indian stock market is an over-reaction and the market should bounce back.
The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse.
Wednesday, January 23, 2008
US crisis does not spell crisis for world economy
I have been saying this for a while now and am glad to have the formidable backing of financier George Soros, writing in the FT: