For these four nations, 2012 is worse than the Great Recession

3. India

Mansi Thapliyal/Reuters/File
A Central Bureau of Investigation (CBI) official gestures outside the New Delhi office of the Abhijeet Group, which owns Jas Infrastructure, after conducting a raid earlier this month. Federal law enforcement officials are investigating irregularities in the government's awarding of coalfield concessions to private and state companies, which has sparked a political crisis and brought government to a standstill.

India is at risk of becoming the first of the BRIC nations – the collection of fast-growing emerging markets that also includes Brazil, Russia, and China – to have its credit rating reduced to junk status.

Just a year ago, India’s government expected double-digit growth in fiscal 2012, just as it experienced even during the worst of the Great Recession. Now, it’s forecasting only 6.8 percent growth – and even that may be too optimistic. High inflation, high interest rates, and a poor monsoon season, coupled with a political crisis that has brought the government to a standstill, have caused business, consumer, and investor confidence to plunge.

There's the possibility that India is touching bottom (and it is still growing at a pace that would be the envy of any developed nation). Embattled Prime Minister Manmohan Singh has appointed a Harvard MBA as his new finance minister, cut government subsidies, and opened up supermarkets and the airline industry to foreign investment.

"India does have a modest stimulus and depreciation," says Adrian Mowat, J.P. Morgan’s chief emerging market and Asian equity strategist. "That's probably sufficient for stabilization." He foresees better times ahead, at least for the stock market. On Sept. 14, the Bombay Stock Exchange's 30-share Sensitive Index hit a 14-month high.

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