New Delhi: Warning that the worst may not be over yet, Reserve Bank of India (RBI) governor D Subbarao has said the global economic recession may not only continue through 2009 but could prolong beyond that.
“Even with current levels of policy intensity, the trough of the global recession is not seen until the end of 2009 and could get pushed out further if the policy responses fail to gain traction,” Subbarao said at the International Monetary Fund-World Bank spring meetings.
Leading the Indian delegation to the International Monetary and Financial Committee meet in Washington, he said India is expected to grow at 6.5 to 6.7% in 2008-09, and the real GDP growth for 2009-10 would be about 6%.
A statement by RBI further quoted Subbarao as saying, “The most frequently asked question today is whether the worst is behind us. While there are incipient signs of business confidence and consumer spending trying to gain toehold, rising unemployment, high inventories and financial stress weigh heavily on overall demand conditions,” Subbarao said.
The RBI’s policy response was aimed at containing the contagion from the global financial crisis while maintaining comfortable domestic and forex liquidity as the government launched three fiscal stimulus packages apart from other measures, he said.