Investment Bank JP Morgan strikes that the year 2020 is the date Recession 2.0 will vent havoc once again. This strike is now coming in thick and fast. The last economic slump that prompted the Great Recession occurred from 2007 to 2009. It was the worst economic downturn in all-time caused due to the failure in regulating the financial industry. Dolefully, we are moving towards another global crash yet again. The main cause behind the 2020 Global Threat that is plaguing us is because of the ceaseless war between US and China. US and China are the largest economies in the world and a constant escalation of US tariffs is sparking a worldwide threat. It is estimated that the US-China trade war can cost the global economy around $585 billion dollars by 2021. Moreover, due to increased uncertainty over Brexit, UK may face a severe economic downturn in case of a no-deal Brexit. A no-deal scenario means UK having to leave the European Union (EU) with no agreement about the settlement or “divorce” process, and a no-deal exit can affect the real estate prices, easy travel to Europe and international student arrivals. It also means that UK would be subject to the trade rules by World Trade Organisation (WTO) and would face the same custom laws, checks and tariffs as other countries, which would likely increase prices of goods and lead to shortages. Another threat that is believed to cause a recession is the rising crude oil prices. This should not come as a surprise as the last five US recessions were also preceded by an increase in oil prices. Oil shocks leave the greatest impact on inflation and hence, interest rates. Rising oil prices force central banks to increase the interest rates in order to deal with inflationary fallouts. For India, a great recession and trade crisis can hamper foreign financial flows, trigger exchange rates and affect the balance of payments. Brexit can have consequences for India as well. Britain is one of the top trading partners of India accounting for nearly 30% of IT exports and for its fast-emerging pharmaceutical sector. India’s external sector can face challenges due to policy changes as India enjoys strong investment and trade relations with both, the UK and the EU. Moreover, India is already facing a crippling slowdown. The Indian economy has shrunk for three straight quarters and the growth forecast does not look very good too. Both infrastructure production and core infrastructure have witnessed a downturn and the automobile industry in India are in its worst crisis, and already looks like is in recession. Around 2.30 lakh jobs in the automobile industry have been lost and it is estimated that there are more to come. Since the US-China trade war is one of the biggest contributors to the predicted recession, maybe if both the countries come to a concluded truce, the Great Recession 2.0 can be avoided or at least be made less pain-inflicting. Even though the threat of a recession in India is not as bad as other countries, it is of utmost importance that the policymakers and government do not ignore it and begin to brace themselves.
OFFICIAL MEDIA PARTNER: NEWSWIRE
OFFICIAL PROMOTIONAL PARTNER: IBS MESSENGER
ความคิดเห็น