Will the Mumbai attacks hurt India's prospects?

After the attacks on Mumbai, the Indian financial sector is looking less and less attractive to foreigners. The situation was already very bad before the attacks, but now it’s worse. This year, investors already sold 13.4 billion dollars of equities. This is also a cause why the Sensex, the bench market, dropped with 60% since January.
Everyone thought also that the Indian economy was immune for the worldwide downturn, but India is just like all other Asian countries who felt the worldwide downturn. This is strange because India is less exposed to the global economy through export and felt the same effect as those countries who have more export.

There growth is also slowing down. At the moment there growth is about 7,5% and next year they hope to have minimum 5%, but it’s going to be hard to get this. The reason why it’s going to be hard to get that result, is the fact that the investments are decreasing. Local banks are less willing to give loans and companies have to loan more abroad.

Specialist say the growth of India in 2010 is going to be negative, but say that India still looks compelling over the long term. I agree with this because, I think now India is just like any other country, they just are trying to survive this economical recession. That is the reason why banks are less willing to give loans. The slowing down of the growth of India is not only caused by the attacks of Mumbai, but is also caused by slowing down of the world economy and the export.

Source: http://www.moneyweek.com/news-and-charts/economics/will-the-mumbai-attacks-hurt-indias-prospects-14214.aspx