The most notable news came from JPMorgan Chase & Co. The bank joined other financial firms and cut its forecast for US economic growth during the fourth quarter. It's now predicting growth of 1 per cent, down from an earlier forecast of 2.5 per cent. Morgan Stanley cut its global GDP forecast to 3.9 percent growth from 4.2 percent for 2011, and to 3.8 percent from 4.5 percent for 2012.
India face and tackle the 2008 crisis well, but there are fear of another recession around the world . Due to full-blown debt default in Europe or a possible US recession or Japan crisis.
The stock market slides all over the world as investors waited for the next signals on the economy — and whether it's headed for another recession. As selling continued overseas, gold rose as high as $1,881 an ounce. Oil prices fell as traders feared a global slowdown that would cut demand for crude.
Economists with Morgan Stanley said that the US and Europe are "dangerously close to recession," adding, "it won't take much in the form of additional shocks to tip the balance”.
The United States is running a $1.1 trillion budget deficit to date in the current fiscal year, the Treasury Department said on Wednesday, as lawmakers began to seek extra cuts in public spending to rein in debt. The budget deficit, 10 months into the government's fiscal year, was $69 billion lower than the same period a year earlier, said the Treasury Department. "The government continues to run significant deficits, one of the reasons S&P took its rating action," said Thomas Simons, money market economist with Jefferies & Co in New York. The U.S. budget deficit is forecast to reach $1.4 trillion, according to the Congressional Budget Office.
U.S. regulators closed two banks on this Friday, bringing the total n umber closed in 2011 to 63, but the pace of closures has slowed. A year ago, 157 banks failed, and there were 140 failures in 2009. The bulk of the failures have increasingly been smaller institutions, with less than $1 billion in assets. This year's bank failures illustrate the problems facing small community banks, many of which are hard hit by the slow economic recovery. The Federal Deposit Insurance Corporation (FDIC) said on Friday that the Bank of Shorewood in Shorewood, Illinois, had been closed. It said the bank three branches would reopen on Saturday as part of Heartland Bank and Trust Company. The Bank of Shorewood had approximately $110.7 million in total assets and $104.0 million in total deposits as of June 30, 2011. The FDIC also said that Bank of Whitman in Colfax, Washington, had been closed.
In INDIAN context, high inflation and high crude oil price effect growth rate. RBI has increases key rate many times to check the inflation that ultimately lower down the credit growth that affect the economy as whole.
Growth estimate for current year down to 7.2% in the current year, the fiscal deficit is budgeted at 4.7% of GDP, most experts expect the government to breach it by a good margin, with some estimates going as high as 5.5%. India's trade deficit was US$ 117.3 billion in 2009-10, down from US$ 118.7 billion in 2008-09. But a Reuters survey in April forecast the gap would widen to US$ 132.70 billion in 2010-11 and US$ 154.50 billion in 2011-12.Many sectors of our economy hurting most by global slowdown viz. IT, Textile and other export depended sectors.
India’s external debt, as at end-March 2011, was placed at US$ 305.9 billion (17.3 per cent of GDP) recording an increase of US$ 44.9 billion or 17.2 per cent over the end-March 2010.That’s almost as much as the foreign reserves India has today, which is $316 billion as of Aug 12.External debt surged 17.2%, or by $45 billion.
Recent slump in Stock market force Indian Government procrastinate its disinvestment program. Money come from disinvestment is used in social sector program like RTE, mid-day meal and MGNREGA.
But there are some favourable condition is also in Indian economy like the net foreign direct investment(FDI) inflow in India is expected to improve to $ 19.5 billion in 2011-12, on account of robust and sustainable economy, the Centre for Monitoring Indian Economy (CMIE) said in its monthly review.
According to the review, FDI inflows during the first two months of FY12 were much higher at $ 7.4 billion, compared to $ 3.6 billion during the corresponding period of FY11.
Total foreign investments, including FII inflows, during April-May 2011 were up at $ 9.7 billion as compared to $ 7.8 billion during April-May 2010.
Domestic demand are also good.But we have to caution about global condition.
