Is Recession Coming: Is a recession like 2008 coming again in the world, what will be its effect on India?

Posted on 8th Jul 2022 by rohit kumar

The fear of recession once again in the whole world has deepened. The whole world, which has been battling the Corona crisis for the last two years, has come to a standstill since the start of the war between Russia and Ukraine in 2022. Ever since the beginning of this fight, its impact is being seen on the economies of the whole world. Due to this fight, there has also been a supply chain crisis in front of the economies already battling Corona, which is affecting the countries of America, Europe, and Asia on every continent. Now the market is once again facing the danger of recession like in 2008. Elon Musk, the world's richest industrialist, is also scared of the dangers of recession. Business is going on in the Indian markets as well.

 

What is an economic recession?

 

The development of any country depends on its economy. When economic growth stops for some time (at least for at least three quarters) in the economy, employment decreases, inflation starts rising and people's income starts falling unexpectedly, then this situation is named economic recession. goes. Ever since the Corona crisis started all over the world, the risk of different economies falling into the grip of recession has increased. The fighting between Russia and Ukraine has added fuel to the fire at this critical time. Now, most market experts have started to believe that in the coming few months, there may be a recession like 2008 in the whole world.

 

There will be a tremendous impact on America and European countries

 

Global brokerage firm Nomura Holdings has also warned the world markets about the slowdown. In a report released by Nomura, it has been said that within the next 12 months most of the world's economy will not be able to save itself from the recession. According to this report, strict policies of central banks of different countries and the rising cost of living for the common man are once again pushing the whole world towards recession like in 2008. It has been said in this report that the danger of recession has deepened in the world's major economies like America, Britain, Japan, South Korea, Australia, and Canada.

 

Strict policies of central banks around the world are taking us toward recession

 

The Nomura report also said that central banks around the world are increasing interest rates to curb inflation. This is being done to achieve the goal of controlling inflation, but it can waste the world's economies. The strict policies of the Central Bank, it is having a bad effect on global growth. Jobs are decreasing all over the world. People's income is decreasing. What people are earning is also getting affected by inflation. In such a situation, the overall growth of the economy seems to be in tatters.

 

Recessions will have different effects on different countries

 

According to the Nomura report, the high rate of inflation is not going to come down at the moment. Inflation pressure is no longer limited to the commodity market. In America, the service sector and the employed are also falling prey to it. Inflation in America has exceeded the figures of the last 40 years. According to the Nomura report, the impact of a recession can be different in different countries. The broking firm believes that between the last quarter of the year 2022, ie between October and December, many countries of the world, including the US, may fall into recession. Once the recession hits, its effects can be seen for six months.

 

Europe will be upset if Russia gets angry

 

Nomura's report said that the way European countries have been making rhetoric against Russia in the last few months, its adverse effect may be seen in the coming times. If Russia gets angry and stops the gas supply to European countries, then no one can save European countries from recession. According to estimates, Europe's economy may see a decline of up to one percent in the coming one to two years. Strong countries such as Canada, South Korea, and Australia may be adversely affected by interest rate hikes. In South Korea, the economy is expected to shrink by 2 to 2.5 percent this year.

 

What will be the effect of the recession on India and China?

 

Talking about the world's two largest markets, India and China, according to the report of Nomura, the effect of the uncertainty on the world's economy will be seen here as well. It is only a matter of relief that the effect of this global recession will be less on India and China as compared to America and European countries. Nomura believes that China will be successful to a great extent in dealing with the recession with its government policies. However, due to Kovid, it has also been said that the stress on the economy will remain. On the other hand, if we talk about India, then the wholesale inflation rate has gone down to the level of 1991 (about 16 percent). This has raised concerns. Here the Reserve Bank has adopted a strategy to control inflation by raising the repo rate twice in the same month, but this has not reduced the problems of the common people. The rupee continues to depreciate against the dollar and is trading at its historical low. Nevertheless, Nomura believes that India will be able to deal with this slowdown. The reason for this is that the domestic market here will continue to strengthen the economy.

 

Stock markets will remain at risk

 

According to the report of Nomura, the volatility in the stock market around the world will continue. The brokerage firm clearly believes that at present the stock markets are going to remain in bad times. Amidst the fear of recession, the market may see further decline. Nomura's report says that if the world goes into recession like 2008, then the economy of a country like America will also collapse by about 1.5 percent. In such a situation, a possible recession can bring a new series of troubles for the world already suffering from the Corona epidemic.

 

Also Read: Inflation: Claim- There may be recession in the whole world next year, crude oil may be $ 45 per barrel