Starting to Unravel

The year 2011 ended with the prospect of continued uncertainty for the world economy; this bodes ill for the Indian model of growth in 2012.

Official macroeconomic data comes in with a considerable lag but what we know from the available information is that few economies in the world were free from trouble towards the end of last year. In the world’s biggest economic bloc, the 17-nation eurozone, real gross domestic product (GDP) growth in the third quarter (July-September) was a mere 0.2%. Indeed, for the 27nation European Union, it was no better – only 0.3%. Growth in the US has also been sluggish, and with both the Republicans and the Democrats dancing to the tune of the bond market, 2012 is unlikely to witness signs of a stable economic recovery. Japan has, of course, been in negative territory since the first quarter of 2011.