Global economic recession: threats and challenges

Global economic recession: threats and challenges By Faizan Usmani The current wave of global economic recession is more than a globalised form of slump hitting those liberalised economies of the world which are bound to share the fated gains as well as disadvantages of liberalised international trade. Since Second World War, the current recession period being suffered by global traders is the largest one and many countries are now seriously considering imposing protectionism policies to strengthen their domestic productions by putting up heavy taxes on imported articles. In this crucial time, reverting back to protectionist policies remains the only viable option for developed economies which would be, in fact, detrimental to connected economies by and large. According to recent report released by the World Trade Organisation (WTO), global trade in 2009 will decline between 2 per cent and 10 per cent whereas entire international trade dropping by 9 per cent on the whole. At the start of this year, global trade was expected to drop by only 2.8 per cent but latest figures, as shown by WTO, are quite alarming to both developed and underdeveloped economies of the world. European Union, apart from America, has been badly hit by the ongoing recession. If existing conditions remain unchanged in coming days, this financial crisis will divide the European region into two financial blocks: one consisting of east European nations like Poland, Russia, Czech Republic, Greece etc and the other one having western and southern parts of the continent including United Kingdom, Ireland, Belgium, France, Netherlands and Luxembourg. Many futile attempts are being made to restrict the flow of money from western banks to Eastern and Southern Europe whereas bailout plans, as announced from respective European governments, don’t seem to work either. During this financial slump, procedural flaws and structural weaknesses of various leading banks and financial institutions have been badly exposed, that’s why a lot of questions are being raised on the authenticity of existing banking and financial systems all over the world. Technically speaking, most developed economies are always hit hardest by widespread economic recession in form of sizeable decrease in investments, massive layoffs, banking bankruptcies coupled with the significant depreciation of the real estate sector. Mostly, heavy financial losses incurred by highly-developed economies are more noticeable to the world as compared to those weakened economies with nothing to lose further. Thus, this should not be a matter of joy for developing and underdeveloped countries as their global economic dependencies will be never evaded in any circumstances whatsoever. For many people, the current financial crisis are symptoms of dying capitalism but a few also take the very phenomenon as a start of a revised and refurbished capitalism taking its roots in a crucial time when developed nations are at war with under-developed countries and existing financial and banking mechanism is comparatively prone to vulnerabilities offered by war-hit economies. The revision is not a total replacement of existing financial systems; in fact, it’s a high time for developed economies to bear a temporary economic slump somehow but, in the end, rise with more vigorous and error-free version of capitalism, which would be more capable to absorb terror jerks but stay affirmed to assure the economic stability of highly-developed regions. Those people, for my part, are really off-beam who regard banking and financial system of Pakistan rather safe and secured from the damages of ongoing financial crisis across the world. The whole national economy, as a matter of fact, is on the verge of collapse whereas banking and financial institutions of the country are nowhere to contribute in order to facilitate or strengthen up the aggravated economic conditions by any means. More than a matter of economic stability like developed countries, the more relevant misery for Pakistan pertains to its economic survival as even a momentary stimulus or partial foreign ad would be quite insufficient to serve the desired objectives. Despite going through a worst slump, western countries can still manage to deal with ongoing economic downfall in all business sectors. But, to somehow sustain the very conditions for underdeveloped countries like ours is absolutely out of possibilities. Despite all of these, our patriotic bankers and proud economists are still misguiding the key decision makers about the prevailing threats looming over our economy. Thus, it would be quite better if we adopt some result-oriented policies and strategies in order to avoid total economic downfall.