The world is watching the US - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

The world is watching the US

Aug 4, 2009

While it will be a while before the US economy gets back on its feet, the good news seems to be that the worst may be over for the world's largest economy. As reported on Moneynews, the IMF expects US' GDP to shrink by 2.6% in 2009 and then rise by 0.8% in 2010. Obviously, the stimulus packages announced by the Obama administration appear to have played a significant role in lending some semblance of stability to the economy. However, there are still many challenges that still persist. One is that unemployment has shown no signs of abating and therefore unless incomes of the people do not pick up, consumption, the biggest driver of the US economy will remain subdued. The most important and difficult issue facing the US government is the timing with respect to unwinding of the fiscal and monetary stimulus measures. Unless and until there are signs that a sustainable recovery is on the cards, the US exit from stimulus program would have to wait. And the problem is that nobody knows when a sustainable recovery will actually take place other than that it will be gradual and painful. A recovery in the US will also do the global economy a world of good for it would mean a pickup in global trade and a booster shot to many countries around the world, mainly those who rely on exports. And while India is not as dependent as some other Asian economies on exports as it has a robust domestic market, a revival in exports will certainly help now more than ever as it has the problem of deficient monsoons to deal with. But given the state of the developed nations at present, a full-fledged export recovery does not appear to happen anytime soon.

Paying the price for cheaper drugs
Healthcare is an important issue for most of the nations across the world and 'affordable healthcare' the most important of them all. So who is paying the price for cheaper drugs around the world? Well, it is the US. With mounting research budgets on one hand and government pressure to reduce costs on the other, global pharma companies are finding it increasingly difficult to recover their costs of R&D. What is more, while prices of drugs in the US are freely determined, elsewhere across the world, it is the government which decides them, meaning that people outside of the US are getting medicines for which bulk of the R&D has been done in the US.

The problem is that Big Pharma are not able to replenish their pipelines with new drugs that can cover R&D costs or for that matter ward off the threat of generic competition. So they are either going in for big ticket mergers or acquiring promising drug pipelines or smaller biotech companies in need of funds. Indian companies focusing more on generics stand to benefit in terms of the increased focus on affordable healthcare and the potential in terms of the number of drugs going off patent in the future. But of course, this comes at a heavy price, namely increasing competition and brutal price erosion.

Equitymaster requests your view! Post a comment on "The world is watching the US". Click here!

  

More Views on News

6 Stocks With High Financial Leverage (Views On News)

Aug 23, 2021

Interestingly, two Adani group companies top the list while a Tata group company also makes the cut.

Top 3 Agriculture Stocks to Keep Your Eye On (Views On News)

Jun 28, 2021

Top agriculture stocks that should have your attention now.

5 Popular Stocks with Zero Promoter Holdings (Views On News)

Jun 21, 2021

List of stocks that have zero promoter holdings, where FPIs hold stake.

5 Indian Companies with Over 7% in Dividend Yield (Views On News)

Sep 17, 2021

These stocks will give you better yields than bank deposits.

A Great Time to Buy ITC (Profit Hunter)

Sep 17, 2021

Is the worst over for the stock of ITC?

More Views on News

Most Popular

Sansera Engineering IPO: Key Points to Consider (Views On News)

Sep 8, 2021

This IPO is a pure OFS and the company is looking to raise Rs 12.8 bn at the upper price band of Rs 744.

5 Stocks that Turned Rs 1 Lakh into Rs 1 Crore (Views On News)

Sep 7, 2021

Patience is one of the biggest virtues you need to have if you want to become a crorepati in the stock market.

The Top Stocks to Sell in this Bull Market (Profit Hunter)

Sep 8, 2021

When I saw the list of so-called 'value stocks' published by a leading brokerage, my worst fears came true.

5 Indian Companies that are Leading the AI Race (Views On News)

Sep 9, 2021

During the pandemic, India reported the highest increase in the use of AI at 45% compared to other major economies. AI has potential to add US$90 bn to the Indian economy by 2025.

Revenge Travel is Here. 9 Stocks Likely to Benefit (Views On News)

Sep 4, 2021

The term 'revenge travel' refers to the desire of going on a vacation after an extended period of lockdown.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2021
Get our special report Multibagger Stocks Guide (2021 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Sep 17, 2021 01:07 PM

MARKET STATS