• About Us
      Asia’s 1 st LEED Platinum Rated Campus

      Asia’s 1st LEED Platinum Rated Campus

      About Us

      • Chairman's Message
      • Vice Chairman & CEO
      • Dean's Message
      • Governing Council
      • Business Advisory Council
      • Academic Advisory Council
      • Work With Us
      • Mandatory Disclosure
      • Anti-Ragging Notice

      TERM ZERO

      Media

      • News
      • Events
      • In Media
      • Media Kit

      Rankings

      Accreditations

      NIRF

      Campus

      Blog

      Annual Events

      • Convocation
      • TEDxGLIMChennai
      • L'Attitude
      • Digital Symposium
      • Sangamitra
      • Annual Alumni Meet
      • SWIM
      • IEC
      • Human Capital Management
  • Programs
      Transform and Lead

      Transform and Lead

      Full Time Programs

      PGPM

      One Year MBA for professionals with work experience

      Learn More Apply Now

      PGDM

      Two Year MBA for professionals with 0-2 years of work experience

      Learn More Apply Now

      EXECUTIVE EDUCATION

      Partner with us for customized learning solutions for your organisation

      Learn More

      Corporate Programs

      PGXPM

      Executive program for Mid & Senior Level working professionals

      Learn More Apply Now APP. Deadline: 30th August, 2020

      PGPM Flex

      Weekend management program for young working professionals

      Learn More Apply Now APP. Deadline: 30th August, 2020

      MBA in Business Analytics

      Family Enterprises Management

  • Faculty & Research
      Ranked 6th

      Ranked 6 th

      by NIRF ranking in teaching and learning among all B-Schools in the country

      Faculty

      • Full Time Faculty
      • Visiting Faculty
      • Adjunct Faculty

      Research

      • Faculty Editors
      • Papers & Journal Publications
      • Case Studies & Books
      • Conference Proceedings

      Centers of Excellence

      • Centre For Excellence in Retail Management
      • Great Lakes Centre For Management Research
      • Kotler - Srinivasan Centre for Research in Marketing
      • Centre for Excellence in Business Analytics and Business Intelligence
      • CET
      • Union Bank Centre for Banking Excellence

      Conferences

      • NASMEI
      • Financial Conference
  • Recruiters & Companies

      “Great Location for Talent. We are happy to continue visiting and having budding professionals join us and grow their careers.”

      Anil Visal

      Partner - Deloitte India

      Campus Recruitment

      • Recruitment Process
      • PGDM Class Profile 2018-20
      • PGPM Class Profile 2019-20
      • Past Recuiters
      • Student Achievements
      • Recruiters Speak

      Internships

      • Recruitment Process
      • PGDM Class Profile 2019-21
      • Live Projects

      Placement Reports

      • PGPM
      • PGDM
      • Internship Report

      Leadership Series

      • Titans Speak
      • Industry Lecture Series
      • Thought Leader Series

      Talent Listings

  • Alumni

The next Global recession; are we ready for it? – Part XIV By Dr. Bobby Srinivasan and Dr. Sudhakar Balachandran

March 15, 2016 | Posted by bobbysrinivasan << back to blog

The current global economic scenario is both baffling and threatening. Never in the history, the interest rate on bank deposit earned negative. Japan, Sweden, Eurozone, Switzerland are all currently doing that with many to follow. Many countries such as Nigeria, Russia, Brazil, Argentina, Venezuela, South Africa have their currencies devalued massively. Infact Venezuela is bankrupt and looks similar to what happened to Argentina in 2001. All commodity prices are significantly lower than before suggesting that the demand for manufactured goods is falling rapidly. China being a large exporter is feeling the pain and it is on the verge of devaluing their currency. There has been a heavy outflow of money from China recently that the Bank of Japan suggested to them to introduce currency control. The IMF chief has already warned that the global economic growth for 2016 and 2017 will be below par. All the oil exporting countries are feeling the pinch due to the declined oil prices. The inventories are so large that the recovery will not be any time soon. According to some reports the oil supply should drop by 3 million barrels a day to bring price stability.

 

What can the central banks can do to prevent the recession from happening. Already the interest rates are either near zero or negative and so there is no way the central banks could lower the interest rates any further to revive sagging economies. They have also tried with quantitative easing through which they pumped in so much money. According to reports nearly 9 trillion US dollars are already pumped into the global economy by the US, Japan, Euro, Britain combined. Their Central bank asset purchases are alarmingly high and hence there may not be further purchases. To add to the slowdown many companies in these countries are selling of assets creating balance sheet recession. The existing pumped money has created stock and asset prices to balloon which are now in the process of correction.

 

It is certain that Chinas role will be very important in the months to come. Their foreign reserves are falling rapidly and its growth rate is hovering around 6.8%. Analysts believe that it is waiting to devalue. Therefore the question is which country is going to take the global economy out of this recession. India is currently enjoying a 7.5% growth. Will it sustain? What impact will it have on the global economy? The most realistic answer is nothing. Indian manufacturing is doing poorly with no major recovery in sight. The agriculture sector saw two years of poor food production. The only sector that is doing well is probably the service and much remains to be seen as to whether it can help the globalized economy.

 

One of the suggestions made is that all countries should adopt an helicopter approach. With this approach the government can transfer money directly to its citizens by crediting their bank accounts and encourage them to consume. It is an experiment worth trying. Consumption is the major driver of the economy. Additional funds in the hands of people will encourage spending. India for example could transfer money to its citizen through the Aadhar Card. The future looks somewhat hazy for commodity countries like Brazil, Canada and Australia. Their currency values against the dollar are at all-time low. It is possible that the entire world would wait to see the recession arrive before they act. I don’t think it is wise using the experiences of Japan which is in permanent recession. Let us hope that our central brokers know how to deal with this situation. In the meanwhile let us wait and pray.


 

<< back to blog

Programs

PGPM - One Year MBA for professionals with 2+ years work experience

Learn More >

PGDM - Two Year MBA for graduates with 0-2 years work experience

Learn More >

Events

Union Bank Finance Conference
Dec 17, 2020

Networking with Champions
Nov 08, 2020

Harry Kraemer on Performance with A Purpose
Oct 08, 2020
Read more

Successful Women in Management (SWIM) Lecture Series
July 05, 2020
Read more

The Great Circle Alumni Talk Series
July 04, 2020
Read more

  • About Us
  • Programs
  • Faculty & Research
  • Recruiters & Companies
  • Alumni
  • Blog
  • Contact Us