A recession is a prolonged period of time when a nation's economy is slowing down, or contracting. Such a slow-down is characterized by a number of different trends, including people buying less stuff, decrease in factory production, growing unemployment, slump in personal income & an unhealthy stock market.


The US, Eurozone, UK and Japan are officially in recession, in the sense of having experienced more than two successive quarters of negative growth. Several analysts have predicted that the rate of contraction of the US economy in the final quarter of 2008 might have been at an astonishing annual rate of 4 to 5 percent. Similar pessimism pervades the other two largest economies in the world: Europe and Japan. There is enormous uncertainty about the depth and duration of the current global recession. But the majority of expert opinion now concedes a substantial likelihood that this will be the worst recession since the Great Depression of the 1930s.


What about India? How bad will it get for us? With over 60 percent of global GDP having toppled into recession, a significant deceleration of India's economic growth is simply unavoidable. After all, we share the same planet as America, Europe and Japan (and a rapidly slowing China). The official estimates of GDP growth for the first two quarters of 2008/9 stayed above 7.5 percent. However, industry-wide indications after September are uniformly gloomy. There are reports of significant declines in output of automobiles, commercial vehicles, steel, textiles, petrochemicals, construction, real estate, finance, retail activity and many other sectors. Exports fell by 12 percent in dollar terms in October and advance information points to a similar decline in November. After September, the economy seems almost to have gone over a cliff.


The Indian textile industry is majorly hit and haunted by the global recession. As per the latest IIP (index of industrial production) data, the cotton textile sector registered a 10.6% drop in output in March 2009. The wool, silk and man-made fibre textiles category saw a dip of 8.2%, jute and other vegetable fibre textiles (except cotton) saw a dip of 1.9% and the textile products (including apparel) category registered a 1.7% drop during March 2009, according to the latest IIP data.


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The author is associated with Technopak Advisors Pvt. Ltd.