The last few years have been the most turbulent for the global economy since the World War II . The crisis that began in the sub- prime mortgage market in the United States spread like wildfire to engulf the entire global financial system . The fall of Lehman in September 2008 was the proverbial last straw , making the crisis truly global.
Advanced economies as a group have been more severely affected with 3.2 percent negative growth forecast for 2009 ( IMF World Outlook , January 2010 ) . All rich countries , with the exception of Australia , experienced decline .
Fiscal 2009-10 has witnessed a global recovery . The risks of double-dip recession however remain , with need for caution in dealing with high public debt and unwinding of fiscal and monetary stimuli . The Indian economy also saw a turnaround , registering 7 percent growth during H1 (April to September 2009 ) . The balance – of – payments situation improved on the back of a surge in capital floes and rise in foreign exchange reserves , which have been accompanied by rupee appreciation .
Developing countries are likely by 2.1 percent in 2009 and 6 percent in 2010 , led by India and China , which remained the most resilient to the crisis . The impact on the emerging world was through reversal of capital flows . fall in stock markets , depreciation of local currency , decline in exports and general risk aversion which affected consumption and investment . The social impact of the crisis though , has been more severe for emerging economies , as they have fewer cushions against shocks .
The response to the crisis , however , has been equally swift , with concerted and coordinated efforts by governments and monetary authorities , through conventional and non- conventional fiscal and monetary instruments . As a result , there are signs of recovery in the global economy with the US , Euro Zone and Japan already out of recession and momentum of growth picking up in emerging economies .