Slowdown in US economy and market
(Arnav Pandya)
A key issue worrying equity investors in India is the possibility of a slowdown in the US economy. The fortunes of quite a few sectors in India are linked to the performance of the US economy. Hence if the engines of the world's largest economy begin to slow, the bottom lines of many Indian companies are likely to be impacted.
Technically, how is the slowdown in any economy measured?
A slow down in the economy means a situation where the growth rate of the economy as measured by the gross domestic product (GDP) numbers shows a smaller rise than witnessed previously. For instance, the economy which was growing at 5 % every quarter may ease to 4.5%. The GDP numbers are announced each quarter, but a slowdown should not be confused with a fall in GDP. For instance, a fall in GDP means that an economy that may have been growing by 5 % has now shown a negative growth of 2 %.
How does a slowdown in the US economy affect other countries?
The global economy is now much more interlinked than it was a few years ago with a lot of trade taking place between nations. The US is a major trade partner for many countries and especially a big importer of goods from across the world. If there is a slowdown in demand in the US, then there will be a lesser demand for these goods and this, in turn, will affect the suppliers who are providing the goods to the US. Thus the direct impact of the slowdown is that the number of orders and demand for several products might see a fall leading to an impact on the performance of several companies across the world.
(Arnav Pandya)
A key issue worrying equity investors in India is the possibility of a slowdown in the US economy. The fortunes of quite a few sectors in India are linked to the performance of the US economy. Hence if the engines of the world's largest economy begin to slow, the bottom lines of many Indian companies are likely to be impacted.
Technically, how is the slowdown in any economy measured?
A slow down in the economy means a situation where the growth rate of the economy as measured by the gross domestic product (GDP) numbers shows a smaller rise than witnessed previously. For instance, the economy which was growing at 5 % every quarter may ease to 4.5%. The GDP numbers are announced each quarter, but a slowdown should not be confused with a fall in GDP. For instance, a fall in GDP means that an economy that may have been growing by 5 % has now shown a negative growth of 2 %.
How does a slowdown in the US economy affect other countries?
The global economy is now much more interlinked than it was a few years ago with a lot of trade taking place between nations. The US is a major trade partner for many countries and especially a big importer of goods from across the world. If there is a slowdown in demand in the US, then there will be a lesser demand for these goods and this, in turn, will affect the suppliers who are providing the goods to the US. Thus the direct impact of the slowdown is that the number of orders and demand for several products might see a fall leading to an impact on the performance of several companies across the world.
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