Are we going for another financial recession 2019?
“Financial Recession,” these two words are enough to strike fear in the hearts of people around the world. It’s been just about a decade since the world has recovered from the Great Recession of 2008. So what will be your thoughts if someone says that we are in for another round of financial recession?
When the Great Recession of 2008 began, no one saw it coming and the whole world was taken aback. Likewise, let’s assume that no one will be able to predict again when the next financial recession will hit the world, or can we?
Only the almighty God can say for certain about the timing of the next financial recession falling on the world; we mortal humans can only assume it to happen based on certain factors and happenings. After all, it is not easy for a Financial Recession to occur; it takes a myriad of factors to happen.
The US-China tariff war and slowing of US growth
Donald Trump got a buoyant economy when he became the President, but then he brought in his own policies of corporate giveaways and income tax cuts. But then it lasted only for a while, the Federal Reserve increased interest rates to calm things.
Then began the tariff war with China after Trump started his “America First” campaign. Trump increased the import tariffs on a number of Chinese goods and they too responded with a similar action on the US. The manufacturing sector went into decline for the first time in a decade.
Brexit possibilities
It still remains to be seen whether the UK stays in the world’s largest trading bloc or not. The uncertainty itself has damaged GDP growth and investments there. Many economists believe that if the UK leaves the EU, the repercussions will be severe to the world. The OECD, World Bank, and IMF have warned, if the UK leaves Europe without a deal, it will knock down global growth considerably.
The Debt Crisis in China
China has been the gear for global growth since the Great Financial Recession of 2008, but it currently lies in a state of a full-blown debt crisis. Industries and people both have borrowed heavily; banks are under the burden of loans that will never be repaid. Whenever Beijing has tried to rein in excessive corporate and consumer lending, the world economy has teetered.
Recession in Germany
The economy contracted in the second quarter by a small margin and is expected to suffer another dip in the third quarter. If this happens, then the country is in Recession as two succeeding quarters of negative growth is the technical definition of a Recession. Even a £45 billion boost to the economy may not save that from happening.
A small number of countries are already in recession and that could increase in the near future. South Africa, Iran, Argentina, Venezuela, Turkey, etc. are currently suffering from a recession. The best course of action will be to prepare ourselves thoroughly for a recession whether it happens or not. That way, we will at least suffer less than what we suffered in 2008. It is anytime good to have a contingency plan ready for every possibility.
