Recession 2022: The world is on the verge of economic poverty [TKB World]

The threat of economic recession is once again looming around the world. Elon Musk, the world’s richest person, is also worried about it. Many people including Musk believe that the world especially developed countries like America are standing on the verge of recession. There are many such factors, due to which it seems that once again the global economy is almost certain to come under the grip of economic slowdown.

Before that, let us know that what is economic recession? If the Gross Domestic Product (GDP) of a country declines continuously for a few months, then this period is called economic recession in economics. Generally two quarters i.e. six months is considered as the norm. At the same time, the continuous occurrence of GDP growth rate is called economic slowdown. Apart from these, there is a similar term in economics called ‘Depression’. This is actually the worst form of recession . If the GDP of a country falls by more than 10 percent, then it is called depression. After the First World War, the Depression came in the 1930s, which is called The Great Depression.

Corona Pandemic (Covid-19): The whole world is facing the havoc of Corona epidemic since 2019. This pandemic has created more economic crisis than health crisis across the world. Right now once again the factory of the world i.e. China is battling with a new wave of epidemics. Industrial hubs like Shanghai are going through a strict lockdown. Due to this, the plants of many companies have closed again. For the world already facing supply chain problems, this new wave has made the problem of supply side worse.

Russia-Ukraine War: Russia and Ukraine are engaged in war since the last week of February. After prolonged conflict and military tension, Russia attacked Ukraine in the last days of February. Earlier it was believed that this war would not last long and Russia would get victory in a few weeks. However, all the guesses turned out to be wrong and the war continues even after months have passed. Due to this war, there has been a crisis of shortage of many essential commodities across the world. Both Russia and Ukraine are major exporters of many grains such as wheat and barley. Their exports have been affected due to the war. Right now the situation is such that there is a situation of food crisis in front of many countries.

Record High Inflation of Decades: For many years, the headlines of inflation news could not be made, but now the old era has returned again. Both wholesale inflation and retail inflation have reached the high level of many years in the last month. Retail inflation in the US eased slightly to 8.3 per cent in April, but it is still at a decades-high. Earlier in March, the rate of inflation in the US was 8.5 percent, which was the highest in the last 41 years.

Rising Capital Cost: To control inflation, central banks around the world are continuously raising interest rates. Experts believe that in this financial year, the repo rate can be increased by 01 percent. In the US, the Federal Reserve is also aggressively raising interest rates. Federal Reserve Chairman Jerome Powell said on Tuesday that interest rates would continue to rise until inflation was brought under control.

Costly Crude Oil: The price of crude oil has been on fire for the past few months. It has remained consistently above $100 per barrel. A rally was also seen in it on Wednesday. Brent crude jumped 01 percent to reach $ 113.08 per barrel. Similarly, West Texas Intermediate rose 1.4 percent to $114.02 a barrel. In fact, America and other European countries have imposed many sanctions on Russia, one of the largest exporters of crude oil. These include sanctions on Russian oil and gas. Russia’s crude oil production fell by about 9 percent in April. On the other hand, OPEC countries are also producing less than the prescribed standard.