Factors that point to global recession in 2016
Global recession is the state in which all the countries face the economic and financial crisis and distress. The stock market crash in 2008 severely affected the economies of the world and it can be observed that the economies have still not been able to recover their actual state. It has been less than a decade when the world saw the great recession and was highly affected by it. There are many factors which affect the global recession. Let’s take a look at them all.
Lesser space for Central bank’s working- central banks are held responsible for the regulation of money in the economy. They adopt and introduce many new policies to stimulate the economy to give it a kick for better acceleration. They need to add up other policies like lower interest rates and open marketing techniques. But all this even provides less autonomy to central banks for working.
1. The European Crisis- the European government was devastated with the Great Recession which came to them as the sovereign debt crisis. They were in a terrible bad shape and so the European Central Bank had to come up with a number of quantitative schemes to help the country by giving it some leverage. If the euro currency goes down, it can lead to more breakouts and worse recessions.
2. Debt issues in Student loans- the debt crisis that occurred during Great Recession was because of loans and mortgages that the people took from the banks and then could not pay back on time and because of this situation the students loan have also come on the hit list. The government believes that if the earning people were not able to pay back then how students will do it.
3. The Chinese bubble- The Chinese economy is the second best in the world. Its GDP has reached 2nd to USA. The middle class has overgrown to elite class thus investing only in Chinese stock and real estate. If the Chinese economy goes down then it will bring all the economies down with it.
4. Another recession- The world economies have not been able to cope up with the last great recession and the next on is already around the corner. The economic weakness due to higher interests has been able to trigger another recession whose breakout will be bad for all economies.
The above points are the basis on which another great recession can be around the corner.