QuestionPaper IBPS-2012-1
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PASSAGE:-When times are hard, doomsayers are aplenty. The problem is that if you listen to them too carefully, you tend to overlook the most obvious signs of change. 2011 was a bad year, to 2012 be any worse? Doomsday forecasts are the easiest to make these days. so let's try a contraption's forecast instead.
Let's start with the global economy. We have seen a steady flow if good news from the US. The employment situation seems to be improving rapidly and consumer sentiment, reflected in retail expenditures on discretionary items like electronics and clothes, has picked up. If these trends sustain, the US might post better growth numbers for 2012 then the 1.5-15 percent being forecast currently.
Japan is likely to pull out of a recession in 2012 as post earthquake reconstruction efforts gather momentum and the fiscal stimulus announced in 2011 begins to pay off. The consensus estimate for growth in Japan is a respectable 2 percent for 2012.
The ''hard-landing'' scenario for China remains and will remain a myth. Growth might decelerate further the 9 percent that it expected to clock in 2011 but is unlikely to drop below 8-8.5 percent in 2012.
Europe is certainly in a spot of trouble. It is perhaps already in recession and for 2012 it is likely to post mildly negative growth. The risk of implosion has dwindled over the last few months-peripheral economies like Greece, Italy and Spain have new governments is place and have made progress towards genuine economic reform.
Even with some of these positive factors in place, we have to accept the fact that global in 2012 will be tepid. But there is a flip side to this. Softer growth means lower demand for commodities and this is likely to drive a correction in commodity prices. Lower commodity inflation will enable emerging market central banks to reverse their monetary stance. China, for instance, has already reversed its stance and has pared its reserve ratio twice. The RBI also seems poised for a reversal in its rate cycle as headline inflation seems well on its way to its target of 7 percent for March 2012.
That said, oil might be an exception to the general trend in commodities. Rising geopolitical tensions, particularly the continuing face-off between Iran and the US, might lead to a spurt in prices. It might make sense for our oil companies to hedge this risk instead of buying oil in the spot market.
As inflation fears abate and emerging market central banks begin to cut rates, two things could happen. Lower commodity inflation would mean lower interest rates and better credit availability. This could set a floor to growth and slowly reverse the business cycle within these economies. Second, as the tear of untamed, runaway inflation in these economies abates, the
Which of the following is NOT TRUE according to the passage?

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