Global crisis recession uneven recovery pdf

The highly resilient economies may observe rapid recovery from the crisis while less resilient economies would require a longer time to adjust to the new realities and ensure real recovery. Some economies may suffer from double dip recession before complete recovery while some other countries may prefer taking structural measures over a prolonged period thereby opting for a slow but positive recovery after recession.

Some countries may register a low level of economic activity for a prolonged period and therefore suffer from recession for a much longer period than the rest of the world. Critique of the Book I consider myself too small to write a critique of the book written by Y. Reddy; however, as a reader of global crisis literature I have observed a few points which I will share with the readers of this book review.

In this pursuit, the role of government in dealing with such crisis has been ignored to some extent. Similarly, the book was published in the year when a number of countries in Europe were facing sovereign debt crisis however, only a passing reference is made to such an important global event which has pushed many countries in double dip recession. Apart from this, the book is worth reading by all economics lovers and also all policy makers as it gives a deeper insight into the global crisis, recession and recovery.

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The United States of America has gone through many different economic ups and downs, two of the most horrific downturns would be the current recession and The Great Depression though.

An economy which grows over a period of time tends to slow down the growth as a part of the normal economic cycle. An economy typically expands for years. Given the relatively small size of our economy, Malaysia is a country heavily reliant on exports as a source of income. Manufacturing, our biggest foreign exchange earner, currently accounts for. Importance of Employee Retention During a Recession Introduction During a recession companies have to constantly protect and plan for financial attacks from increased expenses, decreased sales as well as customer.

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Lvmh in the Recession the Substance of Style. The Great Recession of Importance of Employee Retention During a Recession. The near-term outlook is weaker than previously projected, owing to recurrent COVID flareups, a faster-than-expected withdrawal of macroeconomic policy support, and sharp increases in policy uncertainty and geopolitical tensions. The pace of growth over the forecast horizon will leave output slightly lower than its pre-pandemic trend by , and the catch-up of per capita income growth with advanced economies will be slower during than in the decade before the pandemic.

Key risks to the regional outlook include a further resurgence of the pandemic, financial stress, less supportive external conditions than expected, and an additional rise in policy uncertainty or escalation in geopolitical tensions.

The near-term outlook is weaker than previously projected, owing to recurrent COVID flareups, a faster-than-expected withdrawal of macroeconomic policy support, and sharp increases in pol Regional growth is projected to slow to 2.

Downside risks to the forecast include renewed surges in COVID cases; financial stress; disruptions related to natural disasters, including weather events linked to climate change; and, in the longer term, failure to implement productivity-enhancing and other needed reforms. Growth during the forecast horizon will not be sufficiently Output in is projected to remain about 5 percent smaller than expected before the pandemic.

Growth prospects are uneven across the region, with risks to the outlook predominately to the downside. Further COVID outbreaks, social unrest, high debt in some economies, and conflict could undermine economic activity. Delays in structural reforms or transitioning away from fossil fuels, as well as governance setbacks, could further constrain growth prospects. With climate change increasing the frequency of natural disasters in an already water-scarce region, adaptation will have to accelerate to limit future economic disruption.

Growth in the Middle East and North Africa region is forecast to accelerate to 4. Delays in struc Despite two years of robust growth, the projected rate of per capita income catch-up with advanced economies for has slowed and is only about half the rate of catch-up achieved in the decade prior to the pandemic. A resurgence of the pandemic, especially with the emergence of Omicron, is a key risk to the outlook.

Other downside risks include inflationary pressures requiring more monetary policy tightening than is assumed in the baseline, and a sudden tightening of financing conditions exacerbated by the re-emergence of stress in the financial sector. The rising frequency and cost of natural and climate-related disasters expose the region to climate-induced increases in poverty, disease, child mortality, and food prices. Output in South Asia is projected to expand by 7.

Other downside risks include inflat Nevertheless, recurrent virus flare-ups in several countries and low vaccination rates slowed the pace of the recovery. Growth is forecast to firm to 3. Slow progress with vaccinations is expected to underpin only a gradual recovery of domestic demand, with substantial downside risks clouding the outlook. The fading tailwinds from commodity prices, the unwinding of policy support, and a shift to austerity in some countries to tackle rising debt levels could slow growth.

Amplified by the pandemic, previous weaknesses, such as vulnerabilities to climate change, poverty, food insecurity, and violence, weigh heavily on recoveries across the region as well.

Slow progress with vaccinations is expected to underpin only a gradual re The rise in debt has led to several countries initiating debt restructurings, while many others are in or at high risk of debt distress and may also eventually need debt relief. Historically, several umbrella frameworks coordinated debt relief to multiple debtor countries from multiple creditors on common principles.

They offered substantial—but protracted—debt stock reductions that were typically preceded by a series of less ambitious debt relief efforts. I am not privy to the specifics. But, in general, the standard areas are the equity prices and the real estate prices. The second issue is, one has to be careful how the bank money goes to some of these sectors indirectly. Very often it goes through mutual funds, non-banking finance companies.

Look at the credit growth in the last few months—maximum credit growth was to fund acquisitions, telecom licence fees, real estate and infrastructure.

But as far as the bank money is concerned, their main business is to fundamentally finance working capital, small and medium enterprises and agriculture. The major area of concern is the hollowness in banking. And, especially when there are huge uncertainties and volatilities in global markets, the importance of stimulating productive activity within the economy is important. I think it is time for some countries—and I am not restricting to India, it may even be United States—to consider selective credit controls and the credit allocation to sectors.

It may appear to be too retrograde, but these are extraordinary times when you have to stimulate productive sectors. The public policy has to take a more hands-on approach, with regard to credit allocation and credit dispensation, and credit priorities. In your book you have explicitly recommended tax on capital flows. If you look at the past few months, globally there is a concern with regard to capital flows to developing economies and a number of countries have introduced more active capital account management, etc.

In that context, I was trying to say that the challenge for policymakers is more complex in India. In many other Asian countries, they have current account surplus. When you have current account surplus, you can introduce capital controls more confidently.

So you are to some extent dependent on some capital flows, but not too much of flows. That requires very delicate handling. When you are in a predicament, the solution in mind should be: I will manage capital account very actively and when you manage actively, you can do something to attract as well as not to attract capital flows.

The capital account is managed in a proactive fashion and, therefore, it is better to insist that we keep options open, and we will continuously manage. Is a Tobin tax part of that management? One is saying that we keep the option open and we may introduce tax and even if introduced, we may introduce different rates.

In my view, that is part of having an instrument for capital account management. Once you believe actively in capital account management, you must say I am prepared to use any instrument. During the crisis, the government and RBI worked in close coordination, but now we are seeing the differences. When there is a crisis, the government takes a leading role because it is too important, and huge coordination is required. All over the world, the central bank might have been the first line of defence, but the sovereign has to take the final call.

It has fiscal and semi-fiscal implications and, hence, the government will inevitably be in the driving seat in times of crisis. Once you start the exit policy, there will be tensions. There can be difference in judgements. There is an underlying time dimension. The political leadership as well as the financial markets would like to have the comfort of continuing the stimulus and avoiding risk.

So, their approach is short-term. This is the tension. It seems that you are not comfortable with big banks and industrial houses coming into the picture.

Are you in favour of small banks? Not entirely. I think financial inclusion requires very innovative solutions. Fundamentally, if public policy can intervene in the financial sector for stability, I believe they can also intervene for development.

Second, and a more important issue, is the size. I think, very clearly, it is shown that too big is not only too big to fail, but would also become too big to regulate. We should take a formal view that no bank should have assets more than a particular level. What should be that level? Well, that is a matter of detail. Are financial inclusion and competition mutually exclusive? Financial inclusion, if it is to be achieved, should be achieved through the banking system and not through the new banks.

The same logic would apply, but not by itself. One can even argue that there should be a limit, in any case, in the size of the bank. The question is the regulatory framework. I think one fundamental principle could be the principle of unlevel playing field. After the crisis, everybody agrees that if they are systemically important institutions, they should be subject to a different regulatory regime.

If you accept the principle of unlevel playing field, the ownership becomes relevant. Depending on the ownership also you can articulate the regulation. If the ownership keeps changing, then the regulations can also keep changing, and I think we should accept that as a new paradigm. So you are saying that if industrial houses are allowed to set up banks, they should come under a different set of regulation? In general principle, yes. This is true even for an NBFC non-banking financial company.

One has to be extremely careful. And remember, there are two ways of looking at it in the Indian situation. You already have industrial houses owning NBFCs, mutual funds and insurance firms.

What is your argument? It must be clear by now. One year back you spoke about the high interest charged by for-profit microfinance institutions MFIs. I was actually quite worried in , with the way the whole procedure was going. The strength of MFIs is informality and intimate contact between the lender and borrower.

These are the two principles which made it unique. Once you institutionalize it as large institutions, these two principle are gone. One of them is a listed entity. So what they are doing is profit maximization. My answer has two sides. They exist informally; they should become semi-formal, and later, they should be integrated with the formal fold.

The moneylenders should be subject to regulation; effective regulation. The RBI has also been advocating that in the past few years. In fact, moneylenders in some way have to live in the society and, therefore, they cannot be too aggressive, but impersonal institutions can afford to be aggressive.

As he prepares to catch a flight to Mumbai for the first of three launches in the week on Monday, the other two being in New Delhi Thursday and Hyderabad Saturday , Reddy finds time for a conversation over an early breakfast with Sanjaya Baru.

Why another collection of lectures and not an unabashed book on his tenure as governor, I ask Reddy, echoing the view of his guru that he acknowledges in the book. A collection of lectures. It is far too repetitive because many themes recur in several chapters.

He tried reading Paulson but gave up after a few pages. He felt it was not an honest account of what happened. Will he write one that bares all and tells us about internal debates on policy, within RBI, between RBI and the ministry of finance MoF , his battles with his critics? He says he will give it a shot. So let us talk about your next book, I tell him, arguing that most Business Standard readers would have read most of the important speeches collected together in this volume in the columns of this newspaper.

He proposes we meet for breakfast at seven — a terrible habit with bankers around the world. He says it is a childhood habit from a rural upbringing. When you live in a village you wake up with the sun and go to bed once it sets. At 7 A M the only others up for breakfast are a couple of foreigners, presumably Americans from the IT world that you always run into in a Hyderabad hotel. He orders muesli with cold milk, toast, fried eggs and tea.

I order a plate of idli and south Indian coffee. Was it just good luck or did he have an alternative world view that insured India against the worst of the trans-Atlantic financial crisis?

Was India saved by chance or choice? Even when they disagreed with me they always supported me. Security of tenure enhances institutional autonomy, he says. The change of government in did not make a difference. The central bank did many difficult things that helped — the restrictions placed on overseas corporate bodies in , the liberalisation of overseas acquisitions by Indian firms, the cleaning up of weak banks, the reform of urban cooperative banks, supervision of non-banking financial companies, managing the farm loans waiver and implementation of contra-cyclical regulation — but all this was possible because Delhi supported him.

The latter was more focused on growth, the former on stability. We worried more about the stability of growth. The differences with most barring Ahluwalia were rarely about the direction of policy, they were mostly about the pace and magnitude of change.

Chidambaram is very knowledgeable about markets, concedes Reddy, he knew what he was talking about. But I did not regret my conservatism. We balanced each other! His choice of deputy governors was never questioned. He is worried about recent trends — the creation of the financial stability and development council FSDC. RBI is the monetary authority.

So the RBI governor has a special status that he fears may be getting diluted. Did he ever feel helpless dealing with MoF? When the rupee started appreciating in , he recalls. Chidambaram was talking it up and RBI had no choice but to allow this. MoF did not have a full appreciation of the impact of the rupee appreciation on the real sector. The adverse impact was understood only after it hit growth in the real sector.