Artificial Recession : IS IT A BENEFIT ?

This entry was posted on Tuesday, October 4th, 2011 and is filed under Recession.

If two or three European small nations face financial crisis, why should the world think that it is a recession. There are dozens of Asian and African nations who are in a queue to enter the developed economy list on which they have legitimate rights. But the strange thing is that most countries are happily embracing recession by increasing interest rates and through currency devaluation –

1) Interest rate increase also increases selling pressure and buyers reluctance –  Reduced money supply will certainly have its impact on consumption. When consumption slows down  recession makes its entry or becomes much stronger. 2) Volatile Forex always slows global trade – when currency depreciation continuous, imports become costly and exports become slow as the international buyers try to bring down the prices by the same percentage of currency devaluation. This slowdown also brings a situation like recession.

Why many developed and developing countries are now welcoming this kind of situation ?

Filed Under: Recession