Fastest inflation rise in 32 years | Is a global recession coming? | All you need to know about - Akhbaar Express

Today's topic is the global recession. If you don’t know what recession is then recession is a period of economic slowdown. Experts are saying that 2022 can end in a recession. Since 1950, the world economy has faced 4 global crises in 1975, 1982, 1991, and 2008. This 2008 recession was very awful. We may be again going to face a recession by the end of 2022 if things do not get normal.

Currently, U.S. inflation is more than 8% which is the highest of all time, Russia inflation is more than 17% and turkey is not mentioned here, its inflation is higher than other i.e., more than 54%.   

Sri – Lanka, Pakistan, South Africa, Argentina, Nepal, Ghana, Peru and some other countries are already facing economic crises. Covid - 19 and the Ukraine and Russia war are the main reasons for this crisis. This both things affect the economy of the country very badly due to corona pandemic, many companies go out of businesses, lots of people lost their job and most of the country lost at least 3% of their GDP. and after corona, Russian - Ukraine war started which led to increases price of petrol and natural gas which led to increase the price of everything.

Inflation affects everyone, inflation level in most of the country is at a high peak. Prices of everything from field to fork are increasing day to day. Developed countries like the U.S.A and U.K. are also suffering from food and energy crises. India also banned export of wheat to manage food security and support other vulnerable countries like Nepal and Bangladesh.

Is recession good or bad

To understand this, you should know about the outcome of some past recession or depression (a period that is worse than a recession). Every recession brings some changes in the country which make it economically stronger,

1930 great depression

The outcome of the great depression was,

Most countries moved to the fiat standard from the gold standard.

2008 Global recession

The outcome of this recession was,

The restructuring of the banking system and oversight of investment bank

So here you can understand that recession comes when something is going wrong in the country and it ends up with improving that thing in the country.

A recession can be also defined as a period where the fit one ends up surviving and money comes into the hands of the people who have the best use of that capital.

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Why recession is coming

The reason for the coming recession is excess money printing on a large scale. This is the first time; the U.S.A. printed money on such a large scale. This scenario is leading us toward an unstable inflation period. In this period, we can see an inflation rate of 12% and sometimes 4% then again somewhat 13 or 14%, this cycle repeats, and repeats until the recession ends. This is the first time in history that this is going to happen and lots of companies that are not prepared for this type of circumstance will go out of business.

So here the chain is,

Unstable inflation ----> some companies go out of business -----> slow growth and increase unemployment

Is India's economy in danger

Now India, like other countries, is also suffering from high inflation and slow growth. India's GDP in the 4th Quarter is 4.1% which is expected to be 5.5%. The wholesale price index is 15.88% which is at its highest peak after 30 years. The Repo rate (the rate at which commercial banks borrow money by selling their securities to the Reserve Bank of India (RBI) to maintain liquidity) is currently 4.9% which is going to increase more till December. CPI (consumer price index) was close to 8% in April and currently, it's 6.76%. RBI's mandatory target to control CPI below 4 % but it nearly doubled in April and still remains at more than the targeted level.

Here you can blame the government for slow growth but you can’t blame the government for inflation because controlling inflation is the duty of R.B.I. It seems like R.B.I. is not able to control inflation which is why the central government announced some measures to control inflation. The measures are,

• Reducing excise tax on petrol and diesel to 8 and 6 rupees per liter respectively,
• Reduced import duty of steel,  
• Banned wheat export,
• Imposed export duty on steel products at the rate of 15%,
• Imposed cap on sugar product.

R.B.I. should take responsibility for inflation and take some strict action like change in their monetary policy and the government needs to focus on growth instead of taking this measure as per experts otherwise we could also face the same crises as other countries are facing.

What should we do?

We should be prepared for the recession whether it will come or not. As per current circumstances, 2022 could end in a recession so we need to be prepared for this. Some measures that we should take are,  

• Save extra saving
• Pay off debt·  
• Diversify investment if you are an investor
• If possible, make multiple streams of income

No – one knows what will happen in a recession, whether you will have a job or not, and how much inflation will rise. So it is better to save money as much as possible and stay out of dept.

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