What will happen to the economy in 2009?
The problems of financial markets have started affecting the real economy worldwide. Consensus estimates suggest that 2009 will be worse than 2008.
The World Bank in its report titled Global Economic Prospects 2009 has painted a grim picture for the next year. It says: "Growth prospects for both high-income and developing countries have deteriorated substantially, and a movement of global growth from 2.5 per cent in 2008 to 0.9 per cent in 2009 appears to be on the cards."
Pakistan
As well as being involved in the ongoing re-kindling of its relationship with India, especially since the Mumbai attacks, Pakistan is facing a key problem with the incoming US administration; it announced in December that military action in Pakistani territory may be conducted without the permission of the Pakistani government. Considering the instability of Pakistani politics, managing the volatile relationship with the US over the coming months will be tricky to say the least.
The relationship between Afghanistan and Pakistan is still ‘under construction’. Kabul has criticised Islamabad for many years, saying that it was not doing enough to fight the Taleban. The re-arrest of a former Taleban spokesman may be a step in the right direction.
To solve its economic deficits, Pakistan will be very likely to look to the International Monetary Fund (IMF) again for help on some of its liabilities of 2008. Pakistan is doing the right thing, as such an injection will enable it to restore economic stability and counteract inflation (hopefully!).
India
India and Pakistan have vowed to ease tensions that have been on display since the Mumbai attacks in November. Post the fatal incident, India’s government has been struggling to maintain its credibility as it appeared to lack the security to protect its citizens. A situation the Bharatiya Janata Party (BJP) was ever so quick to exploit by urging the people of Mumbai to vote for them. The tactic did not prove very fruitful to the Hindu nationalists as they lost to the reigning Congress Party, who secured three of the four Indian states that held elections after the Mumbai blasts.
The big challenge for 2009 however is not necessarily that of terrorism or politics. Despite being immune to the grey cloud of the startling global economy, India, or better yet Chindia (China and India), has been experiencing a huge unemployment problem. A counter-measure in the way of interest rate cuts were introduced at the beginning of the month. For one of the world’s fastest growing economies, this is its first real economic challenge.
The problems of financial markets have started affecting the real economy worldwide. Consensus estimates suggest that 2009 will be worse than 2008.
The World Bank in its report titled Global Economic Prospects 2009 has painted a grim picture for the next year. It says: "Growth prospects for both high-income and developing countries have deteriorated substantially, and a movement of global growth from 2.5 per cent in 2008 to 0.9 per cent in 2009 appears to be on the cards."
Pakistan
As well as being involved in the ongoing re-kindling of its relationship with India, especially since the Mumbai attacks, Pakistan is facing a key problem with the incoming US administration; it announced in December that military action in Pakistani territory may be conducted without the permission of the Pakistani government. Considering the instability of Pakistani politics, managing the volatile relationship with the US over the coming months will be tricky to say the least.
The relationship between Afghanistan and Pakistan is still ‘under construction’. Kabul has criticised Islamabad for many years, saying that it was not doing enough to fight the Taleban. The re-arrest of a former Taleban spokesman may be a step in the right direction.
To solve its economic deficits, Pakistan will be very likely to look to the International Monetary Fund (IMF) again for help on some of its liabilities of 2008. Pakistan is doing the right thing, as such an injection will enable it to restore economic stability and counteract inflation (hopefully!).
India
India and Pakistan have vowed to ease tensions that have been on display since the Mumbai attacks in November. Post the fatal incident, India’s government has been struggling to maintain its credibility as it appeared to lack the security to protect its citizens. A situation the Bharatiya Janata Party (BJP) was ever so quick to exploit by urging the people of Mumbai to vote for them. The tactic did not prove very fruitful to the Hindu nationalists as they lost to the reigning Congress Party, who secured three of the four Indian states that held elections after the Mumbai blasts.
The big challenge for 2009 however is not necessarily that of terrorism or politics. Despite being immune to the grey cloud of the startling global economy, India, or better yet Chindia (China and India), has been experiencing a huge unemployment problem. A counter-measure in the way of interest rate cuts were introduced at the beginning of the month. For one of the world’s fastest growing economies, this is its first real economic challenge.
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