The worst is over, and it is equally premature in my view to conclude that a moderation in the ray of decline presages a strong vigorous V shaped recovery in the global economy.

There are 3 reasons why I feel strongly about an anemic outcome for the world economy. One, the crisis itself is not even half over, the latest estimates of the IMF suggest that, by the time this crisis ends over USD 4 trillion of toxic assets will be written down by financial institutions globally and to date the write offs total only USD 1.7 trillion.

Secondly, this is an unusually synchronous --recession in the world economy. Normally in the global recession, the depth of the recession about half of the world’s economies are contracting, about half are rising. So when the rate of contraction moderates, the balance swings pretty sharply towards expansion. This time as of mid-2009, 75% of the worlds economies are contracting and so the balance between contraction-expansion is skewed towards weakness and that will limit the upside of the world economy.

Thirdly, the demand side has been and will continue to be dominated by the world’s biggest and up until recently the most dynamic consumer – the American consumer and the American consumer is finished. We had 12 year trend of consumption growth in the US of 4% a year. In the four quarters ending in the current quarter, the consumer spending will have contracted by at least 1.5%, a record decline for any four quarters. And I think over the next 3-5 years the trend growth rate of consumption is going to be not higher than 1.5%, a dramatic slowdown from the pre bubble norm of 4%. So the demand side of the global economy is going to be severely impacted by that. There is no consumer capable of taking the American consumers place, its ironic - the US which accounts for 4.5% of the world’s population consumed USD 10 trillion last year. Consumers in your country (India) and China combined which is 40% of the world’s population they collectively consumed USD 2 trillion. So even if you are bullish on consumption in China, India and I am, mathematically you cannot fill the void, so, what doest that leave me on the global economy? - It leaves me with a global growth trend that I think is going to average a little bit less than 2% over the next 3 years. Given the weakness that is evident today, you might say 2% is not also bad- sign me up.