Time to introspect
By Dhaval Valia
 At the beginning of the year, I had sounded an alert about the pending economic slowdown.
I had explained the reasons for my pessimism—the US credit crises, weakening dollar, rising crude and commodity prices, inflation woes, tanking of stock markets around the globe—all of them ominous signs of an imminent global slowdown.
Since then, the crude prices have come down from its all-time peak and dollar has strengthened to a 5-year high versus the rupee, but the credit crises in the US has reached catastrophic proportions. Earlier, it was assumed that the US financial crises was limited to only sub-prime housing loans, however over the last six months, and particularly over the last month, we have seen how deep rooted it is.
The crises has shaken the very foundation of the US financial sector, and could even endanger their global economic dominance. Even if the US takes momentous actions to address the crises, the scenario would take at least a couple of years to stabilize. Across the Atlantic, in Europe, the scenario is no good either. Going by analysts, Britain is expected to go into a recession by end of 2008.
Back in India, the finance minister has assured the country about the strength of our economic and market fundamentals, but he too accedes that there is bound to be a fallout.
Already, several IT MNCs have received memos from their US headquarters to stop all ‘unnecessary’ expenses and look at ways to cut costs. Clearly, the economic outlook is bleak, but there is a proverbial silver lining to it.
I expect the crises to correct the excesses caused by the unprecedented economic growth of the last five years. It will correct the job markets, with better talent available at more realistic salary scales. Real estate prices and rentals, which have risen astronomically over the past years, will get reasonable. We would see further consolidation in the industry.
But most importantly, I believe the economic slowdown will give all of us the time to sit back and introspect on our successes and failures. Something, many of us haven’t had the time to do, due to the frantic pace of growth during the past few years. It’s an opportunity to analyze future growth strategies and plan new and innovative business models. Hopefully, we will emerge out of this crises as better companies. |