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World Moving Towards Recession

Essay by   •  November 1, 2012  •  Study Guide  •  549 Words (3 Pages)  •  1,271 Views

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The world may move towards a global recession. We have supported our statement with the flowing data and points-

* Projected global growth is 3.3% as compared to 5.1% in 1990

* Out put is expected to be sluggish in the emerging economies

* IMF staff fan chart has given 1 in 6 chance global growth falling below 2%

* In emerging market and developing economies policy makers are conscious of the need to rebuild on fiscal and monetary policies

The outlook for the global economy is slowly improving again but is still very fragile. Real GDP growth should pick up gradually during 2012-13 from the trough reached during the first quarter of 2012

The above table gives us the global outlook of all the countries. Different regions across the world are categorized here and there respective GDP growth rate and along with export and import data are given.

From the table can conclude that in the Emerging economies the projections show that Import data will be more than the export data. This creates a deficit in the economy. It is to be noted that this is the scenario in the upcoming or emerging economies, so one can think about what will happen to those countries which have negligible growth rate or countries that have reached to epitome growth. It is clear from the data export volume in 2010-13 is 8.7% change as compared to the import value of 10.1 %. This clearly creates a deficit.

Similarly, we can see the data for Asia and other countries which concludes that the whole world as one will be going towards deficit.

To further substantiate my data we can see the above table and look at the current account balance. In the emerging economies the current account balance drastically decreases in the projections made by IMF. Emerging economies have a over all current account balance of 2.2. in 2017 as compared to 2011. This clearly shows the deteriorating level of the emerging economies.

In similar lines we can see the current account balance of different regions around the world and check for the decreasing current account balances.

REASONS WHY THE WORLD MAY HEAD TOWARDS RECESSION:

1. The eurozone is a centrality to the system of highly interconnected Global Supply Chains, So even if a single major bank failure happens in a country existing outside the Eurozone , contagion will quickly spread to the global supply chains causing economic collapse.

2. If new oil fields don't offer a sufficient energy return on energy invested-i.e., if it takes more energy input to extract the oil than the extracted oil even provides, then

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