The commentary from the US Fed is getting worse. Especially the bit where the Fed chief Ben Bernanke says, ?Part of the slowdown is temporary and part of it may be longer lasting.? As also the part where US growth forecasts both for this year and 2012 have been trimmed.

Equally worrying is the the reading of the flash HSBC PMI, which says China?s industrial activity, eased to 50.1 in June, the lowest since July 2010. While a slowdown was expected and perhaps even intended, the number is a whisker above the 50-point level that ?demarcates expansion from contraction? and compares with the final reading of 51.6 for May.

Clearly the faltering recovery in the US and Europe and the conscious monetary tightening measures by the Chinese government are beginning to tell on growth in the world?s fastest growing economy. In short, the global recovery pencilled in during the second half of the year, partly predicated on the reconstruction in Japan, is now unlikely to materialise.

That cannot be good news for India?s exports, which sizzled last year, albeit on a low base, growing 37.5% y-o-y. The tempo hasn?t really flagged since ? the increase was 56% y-o-y in May following a rise in April of 34.4% y-o-y and a robust 43.8% y-o-y in March.

But it will taper off given the way the western world is struggling to get back on its feet. At this point a 20% rise to just under $300 billion this year would be a good show. As for the import bill, mercifully crude oil prices aren?t flaring up. Moreover, commodity prices have corrected over the past couple of months and are behaving themselves and unless growth spikes in China, commodity prices are unlikely to go up in a hurry.

The bad news in India is that inflation remains uncomfortably high and although the bond markets may be making merry no one really believes that rate hikes have ended; the only consolation is that it could be a rise of 50 basis points in the repo rate to 8% and not 75 basis points.

That?s enough to do a fair bit of damage to demand for money or more importantly to consumer confidence especially post the the increase in diesel, kerosene and LPG prices, now scheduled for July. India?s factory output for April came in at 6.3% y-o-y versus 8.9% y-o-y in March ? the deceleration was expected and was also reflected in the PMI for May which saw a reversal of the uptrend seen in previous months coming off by 0.5 points to 57.5%.

Nonetheless, despite chances of a weaker than normal monsoon, the possibility of a sub-8% growth and a non-working government, the stock markets haven?t yet capitulated; the retail crowd is running out of patience but global money managers aren?t showing signs of running away although they?re not adding to their exposure just yet.

In fact, although they?re underweight India just now, they could well take on more risk given the state of the rest of the world. Indeed the TCS chief N Chandrasekharan?s first- of- its- kind response to a downgrade on TCS and the IT space by brokerage CLSA is reassuring.

Chandrasekharan points out that while the global macroeconomic environment may be somewhat difficult, it can be worked around.

The times are tough but India?s still relatively better off. If only hoping for some action from the government wasn?t in the realm of wish-ful thinking.