<p>Reddy, credited for firmly anchoring the domestic financial system and economy during the pre-crisis boom that helped the country tide over the 2008 disaster earlier than expected, said, "Though there will be some spill-over effect on our economy, it won't be that grave as our growth is primarily driven by domestic consumption."<br /><br />Ruling out a recession in the short term, he said a slowdown in global economic growth was for sure in the mid-to medium-term.<br /><br />"While the 2008 crisis was a revelation for everyone, the present crisis arising from the US downgrade by S&P and the lingering debt crisis in the Eurozone economies, is a realisation of the fact that the fundamental problems are still not rectified," Reddy told PTI over phone from Hyderabad.<br /><br />However, he cautioned that it was too early to assess the development as the situation is too fluid now. Projecting an economic expansion of around 8 percent for the domestic economy, with a downward bias, he said to achieve that growth rate, our policy focus has to be fine-tuned at the earliest.<br /><br />Whether there will be a flight of capital if the US economy slips into another recession in the wake of the last week's downgrade-from triple A to double A+-- Reddy said, "If there is excess liquidity in the US system, then we have a fair chance of getting more capital inflows. But if a serious slowdown kicks in, there could be volatility in the fund inflows"</p>
<p>Reddy, credited for firmly anchoring the domestic financial system and economy during the pre-crisis boom that helped the country tide over the 2008 disaster earlier than expected, said, "Though there will be some spill-over effect on our economy, it won't be that grave as our growth is primarily driven by domestic consumption."<br /><br />Ruling out a recession in the short term, he said a slowdown in global economic growth was for sure in the mid-to medium-term.<br /><br />"While the 2008 crisis was a revelation for everyone, the present crisis arising from the US downgrade by S&P and the lingering debt crisis in the Eurozone economies, is a realisation of the fact that the fundamental problems are still not rectified," Reddy told PTI over phone from Hyderabad.<br /><br />However, he cautioned that it was too early to assess the development as the situation is too fluid now. Projecting an economic expansion of around 8 percent for the domestic economy, with a downward bias, he said to achieve that growth rate, our policy focus has to be fine-tuned at the earliest.<br /><br />Whether there will be a flight of capital if the US economy slips into another recession in the wake of the last week's downgrade-from triple A to double A+-- Reddy said, "If there is excess liquidity in the US system, then we have a fair chance of getting more capital inflows. But if a serious slowdown kicks in, there could be volatility in the fund inflows"</p>