Given the evidence of the last few months – capital flow reversals, sharp widening of spreads on sovereign and corporate debt and abrupt currency depreciations – the “decoupling hypothesis” stands invalidated.
Reinforcing the notion that in a globalized world no country can be an island, growth prospects of emerging economies have been undermined by the cascading financial crisis with, of course, considerable variation across countries. BIS Review 39/2009  1  Questions to be addressed India too has been impacted by the crisis, and by much more than we had earlier thought.