It almost feels like the beginning of the year when research firms of every ilk releases, reports on the forecast and outlook for the year ahead. But even as March is about to end, every other day, we have a new report that slices and dices the economy and its impact on business. Reason: The prevailing uncertainty and anxiety about the state of the global economy a la the economic slowdown in the U.S. Some of the reports are soothing, some are matter-of-fact in their prognosis, and yet others suffer from Cassandra’s curse.
A point that most of the reports miss out on is the Bush government’s role in managing the current crisis and the fact that being the election year neither the Democrats nor the Republicans would wish rock the boat further. President George Bush and the Fed Chairman Ben Bernanke have already swung into action to stem the crisis: The interest rate cuts, stimulus package, and the Fed’s new role in extending help to beleaguered financial institutions.
These interventions are bound to have a positive impact on the economy.
So, what is next in line? William Nobrega of The Conrad Group, in his report 2008 Global Economic Forecast foresees that Congress and the Bush administration is expected to announce a plan to allow the Fed and other government entities to purchase up to $400 billion worth of mortgage-backed securities with the authority to renegotiate the structure of these securities. The report also forecasts a $75 billion infrastructure stimulus package. The report says that these measures along with the renewed optimism about an anticipated change in presidential administration will pull the economy out the recession by Q4.
The report has also made predictions for the three emerging markets— India, China and Brazil — in the light of recession. The Chinese currency, Yuan, is expected to appreciate 5 percent against the Euro in 2008 forcing the government to begin focusing on expanding domestic consumption as a driver for economic growth as opposed to exports. With Yuan appreciating, India will find itself in a much more competitive environment and exports would accelerate. Brazil would continue with domestic consumption growth and exports and trade between Brazil, China, and India would thrive.
Though the report does not dwell explicitly on the implications for the global outsourcing industry, it suggests that the recessionary phase would be purely transitory in nature. The stimulus packages may result in some bonus business for some sectors of the outsourcing industry and the global delivery phenomenon would continue unhampered.
