The shock of the economic recession, how prepared the world is

Although the corona epidemic that started in 2019 killed many people, the shock was mainly financial and the war between Russia and Ukraine that started afterwards has exacerbated the financial crisis. There is no clear indication where this economic disaster will ultimately lead, but there are early warnings that the situation could worsen next year.

The war responsible for today’s misery has become a kind of game. This indicates the conflict between Azerbaijan and Armenia or the involvement of the two neighboring countries in Central Asia. Although not directly involved in war, there is a war situation in many places. So the way out of a critical situation is getting narrower.

Meanwhile, it is also believed that the global economic situation is heading for an inevitable recession. Because inflation has almost ruined the world already. As those in the know about the global recession or the Great Recession know it is damaging to the world and to turn away from here the political situation must first calm down – there is no alternative. War must first be stopped in order to secure food production, supply and distribution, accelerate industrialization, curb unemployment, reduce inflation and ease the strain on people’s lives. But that possibility is not visible for the time being.

In the current scenario, this list includes all rich and poor countries. In media reports, a World Bank report on food security paints a picture of global food management showing that 205.1 million people in 45 countries will face food insecurity and that their situation will be worse in 2022 than in 2021. It is feared that between October and December famine will occur in the three coastal areas of Somalia due to severe food shortages. According to the report, food grain prices rose 8 percent worldwide. At the same time, the export price index fell by 2 percent. This shows in which direction the situation is heading.

Recession and Great Recession are two terms used in economics. The world has faced these two situations before. David Beasley, head of the United Nations’ Food Security Department, said in a statement at the Security Council meeting that at least 345 million people in 82 countries of the world will suffer from extreme food insecurity, and if the war between Russia and Ukraine lasts a long time , soon another 700 million people will be added. He also said that the number of people around the world suffering from food insecurity at the start of the corona epidemic has more than doubled in two and a half years after the epidemic.

When the gross domestic product falls, the situation is considered an economic recession. In 1930 the world was confronted with the Great Depression. But right now, the recession of the 1970s is back and forth. According to The Great Inflation, World War II brought prosperity to the United States. At that time, production increased, unemployment decreased and inflation was very low, close to 1 percent. But since 1965, the situation began to change. Unemployment and inflation continue to rise. This was the situation until 1982. This period is called the Great Inflation. It is at this time that the recession is experienced again. A comparison with the situation then shows both rising inflation and unemployment. It is also known that the transition from here is not easy. But there is no consensus on how to collectively avoid this inevitable outcome. Here is the danger.

A World Bank analysis entitled ‘Is the World Recession Coming’ shows that the economy has slowed the most since 1970. Growth in the world’s largest economies, the United States, China and Europe, is slowing. As a result, the following year may take the form of a recession. There has been no inflation in the United States and European countries for the past 40 years. In such a situation, it has been analyzed whether it is possible to avoid the global recession expected next year. It states that a contraction or recession of the economy is imminent with high inflation at the pace at which the economy moves. Even if the Corona situation can be overcome, many countries of the world have not yet returned to their previous state. The steps taken to raise interest rates to control inflation in the economy must be done in a coordinated manner. If this sudden initiative is taken step by step, the economy will also become bearable. Policy support should be coordinated with market demand rather than sudden pullback. Policy support should be aligned with a medium-term framework. Policies must be aligned with labor markets, consumer goods and the pace of trade. Of these, Europe is remarkable. Inflation is rising in most European countries due to the abnormal rise in gas, oil and electricity prices there. The average inflation rate in the 27 countries of the European Union was 9.8 percent last July. That is the highest since 1997.

A recently published figure showed that inflation in the 19 Member States that use the euro averaged 8.9 percent. Inflation in Germany, the top economy, was 8.5 percent in July. The plight of the economy has mainly affected Europe. The energy crisis underlying this instability is not new to say. Countries there have faced severe inflation coupled with energy crises. These crises also cause political unrest. Given the situation, analysts think the coming recession will start from Europe.

Inflation in Britain has reached its highest level in six decades. Recently, Liz Truss has come in the new capacity. According to the International Monetary Fund, three countries, Hungary, Slovakia and the Czech Republic, are experiencing a bad situation. The Russian gas supply to these three countries has been completely shut down.

We go through the real experience of what kind of change a war can bring. The experience of war is not new in the world, but the experience of the crisis created all over the world as a result of war is a bit new. The reason is that such a war has never been seen before after an epidemic like the coronavirus. Now two crises must be faced simultaneously.

After Russia invaded Ukraine, the price of fuel oil rose to a record high in the world market. Poor countries suffer more from its harmful effects. As a result, the world is going through economic stress, food shortages and severe inflation. Meanwhile, there are indications that the war is continuing rather than ending. It is therefore not expected that this problem will be solved in the very short term. The countries of Western and Central Europe and the countries of South and Southeast Asia will not be left out of this recession. The number of hungry people in the world is increasing. Dealing with such disasters presents us with a different challenge.

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