The US is on the verge of a recession. The latest economic data released by its department of commerce on Wednesday is worse than expected. The world's largest economy inched ahead at an annual rate of 0.6 percent from October to December. That's a sharp slowdown from the fast-clip 4.9 percent growth clocked in the previous quarter. It's not hard to guess what the epicentre of trouble is. Building activity collapsed to its worst performance in 25 years—and there are likely more housing-market tremors ahead.
This comes just a few days after the International Monetary Fund (IMF) put out its own bleak prognosis for the US economy. IMF chief Dominique Strauss-Kahn said at the Davos gabfest that he expected a "serious slowdown" in US growth. But the actual numbers could have surprised him as well. IMF has cut its forecast for global growth in 2008 from 4.4 percent to 4.1 percent, largely because it expects the US to grow at a tortoise-trot 1.5 percent this year. That estimate now seems overly optimistic.
The months ahead will provide real tests for the decoupling thesis—the beguiling idea that Asia can grow unhindered despite a sharp US slowdown or recession. It is highly unlikely that growth in this part of the world will be unaffected by what is happening in the US. India's own gross domestic product growth could take a 0.5 percent cut in 2008.
Source - Mint
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