Explorer

Election Results 2024

(Source: ECI/ABP News/ABP Majha)

The Global Recession: Analysing And Understanding The Current Geo-Political Situation

The world is going to see a sharp fall in the real GDP growth from 6.1 per cent to 3.6 per cent, reflecting an impending growth in the United States, China, and the Eurozone, according to IMF

Recession, sources, and implications

The National Bureau of Economic Research defines recession as “a significant decline in economic activity spread across the economy, lasting more than a few months”. With no official definition available, we can refer to recession as a period of significantly slower economic activities lasting for over a span of time.

It is difficult to predict recessions beforehand, as there could be several causes behind it. However, to understand sources, there are a slew of reasons; such as one linked with a sharp change in input pricing used in producing goods and services.

The next big reason for triggering a recession could be the contractionary fiscal and monetary policy employed to curb inflation, while another reason could be the credit boom or a fall in external demand.

Most organisations suffer during a recession, primarily because of the falling demand and revenue leading to an uncertain future.

The major cost of an economic recession is the vicious cycle of economic slump. As businesses seek to cut costs, unemployment rates tend to rise, leading to a reduction in the consumption rates causing inflation rates to go down. Lower prices further reduce corporate profits triggering more job cuts. With a falling government revenue, recession becomes a leading cause of Budget deficit and debts.

Are we heading for recession?

As per the IMF baseline forecast, the world is going to see a sharp fall in the real GDP growth from 6.1 per cent to 3.6 per cent, reflecting an impending growth in the world’s three largest economies – the United States, China, and the Eurozone.

4

Higher than expected inflation, the US and the major European countries are triggering tightened global financial conditions. Amid the Covid-19 outbreak and lockdowns, China’s slowdown has been worse than anticipated following a further negative spillover from the war in Ukraine.

Still reeling under the pandemic and Russia’s invasion in Ukraine, the world is going to witness dismal and uncertain growth.

Despite the slowing activity, global inflation has been revised, partly due to the rising food and energy prices.

Global inflation this year is anticipated to reach 7.4 per cent from 4.7 per cent last year, showing the impact of cost pressures from disrupted supply chains and tight labour markets.

Amidst stalling growth of the world's three largest economies, India is standing tall with a high GDP growth rate and strong foreign reserves (Forex).

A recent survey by Bloomberg has claimed that despite the rupee breaching the 80 per dollar mark against the US dollar, India's chances of slipping into a recession are very low. Although the IMF has lowered India's GDP prediction from the current fiscal to 8.2 per cent from 8.9 per cent, the country will still remain one of the fastest-growing economies in the world.

Reserve Bank of India Governor Shaktikanta Das on Friday, while announcing MPC outcome, said India’s GDP growth forecast retained at 7.2 per cent. Despite the economy still grappling with inflation, India’s real GDP growth projection for FY22-23 is retained at 7.2 per cent, with Q1- 16.2 per cent, Q2-  6.2 per cent, Q3 -4.1 per cent,  and Q4- 4 per cent with risks broadly balanced.

Way forward

Given the conducive recessionary circumstances, one can foresee the slow economic growth the world is heading towards.

The IMF has already given its numbers, predicting global inflation and real GDP growth. Inflation at current levels represents a clear risk for current and future macroeconomic stability. Now, central banks play a leading role in defining the country’s policies and priorities. Despite India’s chance of getting affected by the recession is marginal, the government and the Reserve Bank need to be highly vigilant towards the global disruptions.

Mehak Jain, Financial Planning & Analysis, ABP Network
[Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP News Network Pvt Ltd.]

View More
Advertisement

IPL Auction 2025

Most Expensive Players In The Squad
Virat Kohli
₹21 CR
Josh Hazlewood
₹12.50 CR
Rajat Patidar
₹11 CR
View all
Most Expensive Players In The Squad
Rishabh Pant
₹27 CR
Nicholas Pooran
₹21 CR
Ravi Bishnoi
₹11 CR
View all
Most Expensive Players In The Squad
Jasprit Bumrah
₹18 CR
Suryakumar Yadav
₹16.35 CR
Hardik Pandya
₹16.35 CR
View all
Most Expensive Players In The Squad
Heinrich Klaasen
₹23 CR
Pat Cummins
₹18 CR
Abhishek Sharma
₹14 CR
View all
Most Expensive Players In The Squad
Ruturaj Gaikwad
₹18 CR
Ravindra Jadeja
₹18 CR
Matheesha Pathirana
₹13 CR
View all
Most Expensive Players In The Squad
Shreyas Iyer
₹26.75 CR
Arshdeep Singh
₹18 CR
Yuzvendra Chahal
₹18 CR
View all
Most Expensive Players In The Squad
Sanju Samson
₹18 CR
Yashaswi Jaiswal
₹18 CR
Riyan Parag
₹14 CR
View all
Most Expensive Players In The Squad
Venkatesh Iyer
₹23.75 CR
Rinku Singh
₹13 CR
Varun Chakaravarthy
₹12 CR
View all
Most Expensive Players In The Squad
Rashid Khan
₹18 CR
Shubman Gill
₹16.5 CR
Jos Buttler
₹15.75 CR
View all
Most Expensive Players In The Squad
Axar Patel
₹16.5 CR
KL Rahul
₹14 CR
Kuldeep Yadav
₹13.25 CR
View all
Advertisement
25°C
New Delhi
Rain: 100mm
Humidity: 97%
Wind: WNW 47km/h
See Today's Weather
powered by
Accu Weather
Advertisement

Top Headlines

Sambhal Violence: 3 Dead In Clashes Over Mosque Survey, Akhilesh Yadav Accuses BJP Of 'Orchestrating' Violence
Sambhal Violence: 3 Dead In Clashes Over Mosque Survey, Akhilesh Yadav Accuses BJP Of 'Orchestrating' Violence
Hemant Soren Stakes Claim To Form Next Jharkhand Government, Confirms Oath Ceremony Date
Hemant Soren Stakes Claim To Form Next Jharkhand Government, Confirms Oath Ceremony Date
IPL 2025 Mega Auction Live Updates: Pant, Iyer Headline The Event, SOLD For Rs. 27 Cr And Rs. 26.75 Cr Respectively
IPL 2025 Mega Auction Live Updates: Pant, Iyer Headline The Event, SOLD For Rs. 27 Cr And Rs. 26.75 Cr Respectively
Maharashtra Government Formation To Be Completed By This Date As BJP, Shiv Sena, NCP Eye CM Post
Maharashtra Government Formation To Be Completed By This Date As BJP, Shiv Sena, NCP Eye CM Post
Advertisement
ABP Premium

Videos

From Hating Computers to Building a Software Empire, The Inspiring Journey of ESDS CEO Piyush SomaniGautam Adani Faces Another Blow as SEBI Launches Probe Against Adani Group | Paisa LiveBigg Boss 18: Did Salman Khan Bully Arfeen Khan? Hrithik Roshan's Mind Coach Breaks Silence!Tamannaah Bhatia Has Vijay Varma as Bonus? Jimmy Shergill's Army Exam & Avinash Good Looks! EXCLUSIVE Interview

Photo Gallery

Embed widget