Serious dimensions of international financial crisis are becoming apparent with successive bailouts of major investment banks, topped by takeover of principal mortgage institutions, leading to layoffs and pile up of inventories. International money market is nearly frozen, resulting in acute credit crunch. Total loss in stock values world over since the beginning of 2008 has been nearly $30 tn. Total cost to the US could go to over $2 tn since the crisis is not likely to end soon.

Indian corporates, slowly but surely, are being sucked into the global financial storm. In India, inflow of foreign capital is drying up and domestic credit has become expensive, resulting in decline in growth of industrial output. The apparent slowdown of the US economy is bothering economists all over the globe. Emerging economies such as India and China are well aware of their dependence on the US economy and are bracing themselves for the impending impact. The global economy has slowed since the second half of 2007 against the backdrop of the financial turmoil and a deepening US downturn.

Developments in the advanced industrial economies pose major challenges. First, a pronounced slowdown in the US is hurting the Emerging Market Economies (EMEs) which, although remarkably resilient so far, still depend significantly on external demand. Second, tighter conditions in global financial markets are constraining EMEs with large current account deficits, particularly those relying on more volatile portfolio financing. Countries heavily dependent on cross-border bank borrowing are greatly affected.

Analyst Magazine, Indian Markets, Financial Crisis, Investment Banks, Money Market, Liquidity Crisis, Foreign Institutional Investors, Gross Domestic Product, GDP, Government's Policies, Business Process Outsourcing, BPO, Macroeconomy, Global Crisis, Indian Economy.