Economic Survey 2009

Although the global Financial crisis is expected to ease within the course of 2009, its effects are likely to impact negatively on many of the OECD countries, with financial market stabilization now projected to take longer than previously envisaged. The outlook for the global economy in 2009 is therefore bleak. In line with this expectation, most of the major economies of the world are projected to contract. While the rate of contraction is expected to moderate from the second quarter onward, world output is projected to decline by 1.3 percent in 2009 as a whole and to recover only gradually in 2010, growing by 1.9 percent (World Economic Outlook, April 2009). Despite relatively weak financial linkages with advanced economies, the current global financial crisis is likely to continue impacting negatively to the domestic economy. These effects will include reduction in demand and price of commodities in the world market, reduction in capital flows such as investment, official development assistance, and remittances, and reduced earnings from tourism. In the agricultural sector, output might remain subdued due to insufficiency of rains.The lowering of the cost of inputs like fertilizers and seeds is however expected to encourage farmers to cultivate more land. Tourism is likely to perform below potential.