Dubya's folly may not be the war with Iraq, but the timing of it-just when it looked like the global economy was well on the road to recovery. It had bounced back smartly from zero growth in 2001, grew by 2.8 per cent in 2002 and 2003 promised to be better. The economies of Japan, the EU and the US, all grew in the last quarter of 2002 and it looked like the world had put the excesses of 1999 and 2000, the trauma of 9-11, and the corporate scams of 2002 behind it.

The American President, however, was following a different script. Theories have done the rounds about the economic rationale for the war, of America's pressing need for Iraqi oil. George W. Bush must certainly be aware of the economic nuances, but it is likely that his motivation stems more from orthodox notions of good and evil than anything else, the kind of personality-quirk that befits someone who chairs a revivalist meeting, not the man who holds the highest office in the world.

So, the war is on, it is into its third week, and Bill Nordhaus, a respected Yale-academic is just articulating a growing concern among bankers and economists when he speaks of a double-dip in the US: a weak recovery followed immediately by another recession.

Nordhaus' logic? A longish war with Iraq will render the US financial markets volatile and dent consumer and business confidence. That would shave a full percentage point off GDP growth (which is down to 2 per cent already), result in increased unemployment, and swell the fiscal deficit. And circa April 2003, the services sector, the coronary artery of the US economy, is not showing any signs of growth-the first time this is happening in 14 months.

The war, then, will significantly erode the US' capacity to trade with other countries. That spells disaster for the global economy. Japan, for instance, was counting on a recovery in its exports to the United States. A weak dollar will put paid to those hopes. Worse, countries like Japan and South Korea that are dependent on oil imports are vulnerable to spikes in oil prices related to the war.

A report put out by the New York-based Centre for Strategic International Studies sees the price of oil zooming to $40 a barrel in 2003, slipping to $35 in 2004, if the war lasts three months. And if the war lasts six months, states the report, the prices could be $80 in 2003 and $38 in 2004.

Asia looked set to be the great hope of 2003, but the double whammy of the war and the SARS epidemic, if it lasts another two months, could see several economies in the region slipping into recession. "Tourism and consumption are the only factors keeping East Asian economies out of recession and SARS is knocking the wind out of both," says P.K. Basu, the Chief Economist at CSFB.

India's huge domestic market offers it a cushion against external recessionary tendencies. Previous spikes in oil prices have hit it hard (See Slippery When High), but the country's $75 billion (Rs 360,000 crore) in forex reserves should save it from a similar fate just yet. Still, a global recession will extinguish all hopes of the Indian economy growing at over 6 per cent this year, even next.

-Ashish Gupta

NICE TO KNOW
Distaff Research

It would appear that market research agencies (or at least, the research function of these firms) are popular with women. That's a generalisation backed by (sorry, we couldn't help this) research. Between 35 and 62 per cent of researchers in India's top market research firms are women. This isn't a recent phenomenon; research has always been a popular destination for working women. Does that have anything to do with famed female intuition? Not really, says Thomas Puliyel, the President of IMRB. ''There is a great deal of flexibility; women find it easier to come back after motherhood-breaks (to research); and the service-oriented mindset suits them." And here we were, getting ready to write about the seventh sense women possess.

-Shailesh Dobhal

The Exim Policy of My Dreams
An economy-hack lays down his prescription for exports of $500 billion by 2009.

As I write this piece, India's exports are a mere $ 46 billion (Rs 2,18,357 crore). A target of $500 billion (Rs 24,00,000 crore) by 2009 may seem the stuff of which dreams are made, but personally, I think it is well within our reach. After all, didn't China's exports zoom from $148.8 billion (Rs 7,14,240 crore) in 1995 to nearly $280 billion (Rs 13,44,000 crore) in 2002. Here's how India can do it.

Random checks of exported goods at airports should be done away with. The customs department should only inspect suspicious consignments. That will reduce the bureaucratic hassles exporters face at airports. And the introduction of a system of self-declaration of exports and imports will serve to reduce transaction costs in India- currently among the highest in the world.

WTO rules prohibit export subsidies, but the country should be willing to take a risk and continue export-promotion schemes that make exporters more competitive by helping them cope with high interest and infrastructure costs. Someone will drag India to WTO's dispute settlement body, but till then, the schemes should continue.

All of India's export hubs outside the Special Economic Zones (SEZs) should be turned into virtual SEZs. That will increase the universe of companies eligible for the special benefits those within SEZs get-such as selling in the domestic market without payment of a special additional duty-and it will serve the cause of companies that cannot relocate to the SEZs for reasons of their own. Most pharmaceutical companies (and some are significant exporters), for instance, have huge laboratory facilities that it is not always possible to locate in SEZs. A focus on the entertainment industry and healthcare-tourism (already, people travel to India for bypass surgeries) will also help increase India's exports. I believe all of this should help increase India's exports by some 25 per cent from the existing $50 billion-minus. As for the rest, doing away with the annual Exim policy, and turning the entire economic emphasis of the government into making India an export-led economy should do the trick. That may require sweeping agricultural-, power-, and labour-reform... Hey, wait a minute, hasn't the government been dithering over the exact same things? So, we do know all the answers.

-Ashish Gupta

TRIVIA
India's Unique Exports

The Brits love Indian curry; and parts of the world, may find it difficult to resist the charms of Indian vegetarian cuisine. Market opportunity: $10 billion, but how do we export it?

Bollywood releases are popular across Asia, Africa and West Asia, even Europe and the US. Market opportunity: $400 million, and they can have Salman Khan as a bonus.

If we can get WTO to buy our case that yoga, TM, AOL, and the like are Indian trademarks....

CONTROL
All In The Family

Sulajja Firodia Motwani: Family affair

What's the fastest way to lose top professionals in your company? Just get the young in your family to second-guess them -as Kinetic Engineering is proving it. The two-wheeler manufacturer, which has lost its Deputy Managing Director Arun Pande and Sr VP (Sales and Marketing), Ajay Kapila, in a span of less than eight months, has handed over almost its entire sales and marketing team to founder Arun Firodia's brood. Second daughter Sulajja Firodia Motwani is, of course, the Jt md. Her younger sister, Vismaya Firodia, is VP, Corp. Comm, and in November 2002, the youngest and the only son, Ajinkya, 23, joined as gm Marketing. The highest-ranking professional at Kinetic is a product manager. ''If you have talented people in the family who can run the family business, why not use them instead of professionals?'' asks Vismaya Firodia. In that may also lie the seed of a recession-proof idea: Get the family to buy the bikes too.

-Swati Prasad