The economic recession’s reach is apparently universal – it seems nowhere will escape the clutches of the economic downturn.

• It seemed that India’s booming economy would be one of the few lucky survivors of the global economic meltdown. But now it looks as though what happened to the rest of the world is beginning to happen in India.
• Most of the boom of the last 5 years was a result of investment – and since foreign investment has declined with the global economy, so has a good chunk of India’s growth. A report from the IMF says this reliance on foreign investment has made India’s economy particularly vulnerable.
• Since cheap foreign loans are harder to come by, Indians are now forced to borrow from Indian banks. Unfortunately, the same tightening of credit that happened in America is happening among India’s domestic lenders.

Facts & Figures

• At the end of 2008, the Indian economy’s rate of growth was at its lowest in 5 years: 5.3%.
• In 2008, 38% of the Indian GDP was accounted for by investment. At one time, more than a third of these investors were foreign, but last year foreign investment fell to its lowest level in two years.
• The Indian stock market dropped by 58% last year, though much of that loss has been recovered in the early part of 2009.

Best Quote

“If India wants to go back to the 8 to 9 percent growth rate, private investment and low cost of capital is essential.” – Jahangir Aziz, Chief Economist for India at JPMorgan Chase

Tags: global economy, India, investment, recession