WORLD INTO RECESSION
What’s in news?
The world has clearly entered a recession as per the recent assessment for the year 2020 and 2021.
- Assessed by: The world has entered a state of recession was assessed by International Monetary Fund (IMF) – and this recession would be worse than in 2009.
- It also projected that, this state of recession would be recover by the next year. Such recovery is possible only if the international community succeeds in containing the virus everywhere and prevent liquidity problems from becoming a solvency issue.
- Financial need: The overall financial needs of emerging markets is $2.5 trillion.
- Financial aid: Over 80 countries, mostly of low incomes, have already have requested emergency aid from the IMF.
- India’s GDP: As per Moody’s service, India’s GDP were estimated for the year 2020 at 2.5 per cent, from an earlier estimate of 5.3 per cent.
- Reason: The reason for such economic slowdown is three day lockdown – the most far-reaching measure undertaken by any government to curb the spread of the Corona virus pandemic. The lockdown has resulted in closure of businesses as well as factories and temporary unemployment for thousands of workers.
Data to know:
What is recession?
- Definition: Recession is a slowdown or a massive contraction in economic activities – significant fall in spending generally leads to a recession.
- Such a slowdown in economic activities may last for some quarters thereby completely hampering the growth of an economy. In such a situation, economic indicators such as GDP, corporate profits, employments, etc., fall.
International Monetary Fund (IMF):
- Established year: The organization was established in 1944 at the Bretton Woods Conference but functioned from 1945.
- Headquarters: Washington D.C., United States of America.
- Structure: Following are the structure of IMF;
- Board of Governors
- Ministerial Committees
- International Monetary and Financial Committee (IMFC)
- Development Committee
- Executive Board
Links to note: