financial tsunami..!

Its sure that the world will not see another "great depression of the 1930s". The massive stimulus package implemented by the different countries at the right time has been able to lift this world from this financial mess. Its estimated that the world will witness GDP growth rate of about 3% in 2010. The stock markets have risen almost 50% since march 2009 in anticipation of economic recovery. However, the recovery is going to be weak for a year . There will not be sufficient reduction in the unemployment till 2011.

Moreover,this flood of cash has overliquified the system. i.e there is excess liquidity in the system,which if not managed properly can give rise to another economic crisis in the future. Already, there is talk of impending inflation in many developing countries. The world leaders will have to devise a right strategy to close the tap ,i.e tightening of the state expenditure once the world economy gets on track.

However, it must be ensured that there is no premature removal of stimulus package as it may prolong the recovery process. However, the countries which are running huge fiscal deficit must get their house in order at the appropriate time so as to avoid getting caught in another crisis in an attempt to mitigate the impact of this tsunami.