rec cession main
TRANSCRIPT
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 1/34
PROJECT
WORK
Made by : AMOL BHARGAVA09/89242
B COM(H) IIIrd year
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 3/34
DYAL SINGH COLLEGE
(Lodhi Road, New Delhi-110003)
PROJECT ON RECCESSION
Submitted in partial fulfillment of the requirement of Paper No. XXXVIIB COM (H) part III Examination (2009 – 2012)
Submitted by :Amol BhargavaB com (H) 3rd yr.09/89242
Project Mentor :
Mr. Vikas SharmaDepartment of commerce
3
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 4/34
DECLARATION
This is to certify that the present project report is the outcome of
my own efforts and my indebtedness to other publications has
been duly acknowledged at the relevant places. It has not been
submitted in part or full for any other diploma or degree of any
university. I have taken proper care and shown utmost sincerity
in completion of this project. This project is prepared in
accordance with the guidelines issued by University of Delhi.
Mr. Vikas Sharma Amol Bhargava(Project Mentor) (student’s name)
4
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 5/34
ACKNOWLEDGEMENT
This project has been made possible through direct and indirect
support of various people from whom I wish to express my
appreciation and gratitude.
I would like to thank DELHI UNIVERSITY for giving me an
opportunity to work on a valuable project.
I owe my sincere thanks to Mr. Vikas Sharma and other
faculty members for constantly guiding me and tackling variety
of hurdles with implicit patience throughout my project.
Amol Bhargava
B COM (H) 3RD YEAR
09/89242
DYAL SINGH COLLEGE
5
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 6/34
CONTENTS
Sr.No. PARTICULARS PAGE
NO.
1 OBJECTIVES 2
2 CONCEPT 4
3 DEFINITIONS 5
4 SHAPES OF RECESSION 6
5 CAUSES OF RECESSION 9
6 IMPACT OF RECESSION 11
7 BENEFITS OF RECESSION 138 OVERCOMING RECESSION 14
9 THE PROBLEMS FACED IN RECOVERING
RECESSION
15
10 THE ENTIRE STORY OF RECENT US
RECESSION
17
11 IMPACT OF RECESSION ON GLOBAL
ECONOMY
22
12 IMPACT OF RECESSION ON ASIA 24
13 SUGGESTION 34
14 BIBLIOGRAPHY 36
CONCEPT OF RECESSION
In economics, a recession is a business cycle contraction, a general
slowdown in economic activity over a period of time… During
6
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 7/34
recessions, many macroeconomic indicators vary in a similar way.
Production as measured by Gross Domestic Product (GDP),
employment, investment spending, capacity utilization, household
incomes, business profits and inflation all fall during recessions; while
bankruptcies and the unemployment rate rise.
Governments usually respond to recessions by adopting expansionary
macroeconomic policies, such as increasing money supply, increasing
government spending and decreasing taxation. During recession interest
rates usually fall in during these months to stimulate the economy by
offering cheap rates at which to borrow money.
The technical indicator of a recession is two consecutive quarters of
negative economic growth as measured by a country's gross domestic
product (GDP); although the National Bureau of Economic Research
(NBER) does not necessarily need to see this occur to call a recession.
The NBER defines a recession as a “significant decline in economic
activity lasting more than a few months.”
Recession is a normal (albeit unpleasant) part of the business cycle;
however, one-time crisis events can often trigger the onset of arecession. The global recession brings a great amount of attention to the
risky investment strategies used by many large financial institutions,
along with the truly global nature of the financial system. As a result of
7
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 8/34
such a wide-spread global recession, the economies of virtually all the
world's developed and developing nations suffer extreme set-backs and
numerous government policies are implemented to help prevent a similar
future financial crisis.
A recession is defined simply as a period when GDP falls i.e., negative
real economic growth for at least two quarters. Some economists prefer a
definition of a 1.5% rise in unemployment within 12 months. While
economic recessions are foreseeable, they generally are not detected
until already in motion.
Recession (or contraction) is a natural result of the economic cycle and
will adjust for changes in consumer spending and consumption or
increasing and decreasing prices of goods and labor.Rarely though
entirely possible, experiencing a multitude of these negative factors
simultaneously can lead to a deep recession or even long economic
depression.
8
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 9/34
DEFINITIONS
1. The Newspaper Definition:
The standard newspaper definition of a recession is a decline in the
Gross Domestic Product (GDP) for two or more consecutive quarters.
2. The BCDC Definition:
The Business Cycle Dating Committee defines a recession as the timewhen business activity has reached its peak and starts to fall until the
time when business activity bottoms out. When the business activity
starts to rise again it is called an expansionary period. By this definition,
the average recession lasts about a year.
3. The general definition:
Recession is a period of general economic decline; typically defined as a
decline in GDP for two or more consecutive quarters. A recession is
typically accompanied by a drop in the stock market, an increase in
unemployment, and a decline in the housing market. A recession is
generally considered less severe than a depression, and if a recession
continues long enough it is often then classified as a depression. There is
no one obvious cause of a recession, although overall blame generally
falls on the federal leadership, often either the President himself, the
head of the Federal Reserve, or the entire administration.
9
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 10/34
RECESSION SHAPES
Recession shapes are used by economists to describe different types of
recessions.
V-shaped recession:
Source: Bureau of Economic Analysis
In a V-shaped recession, the economy suffers a sharp but brief period of
economic decline with a clearly defined trough, followed by a strong
recovery.
E.g.: Recession of 1953 in the United States
U-shaped recession
Source: Bureau of Economic Analysis
10
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 11/34
A U-shaped recession is longer than a V-shaped recession, and has a
less-clearly defined trough. GDP may shrink for several quarters, and
only slowly return to trend growth.
E.g.: The 1973–75 recession
W-shaped recession
Source: Bureau of Economic Analysis
A W-shaped recession or "double dip" recession, occurs when the
economy has a recession, emerges from the recession with a short period
of growth, but quickly falls back into recession.
E.g.: The Early 1980s recession in the United States.
L-shaped recession
Source: Penn World Tables
11
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 12/34
An L-shaped recession occurs when an economy has a severe recession
and does not return to trend line growth for many years, if ever. This is
the most severe of the different shapes of recession
E.g.: recession occurred in Japan following the bursting of the Japanese asset price bubble in 1990.
CAUSES OF ECONOMIC RECESSION
An economic recession is primarily attributed to the actions taken to
control the money supply in an economy. The Federal Reserve is the
agency responsible for maintaining the delicate balance between money
supply, interest rates, and inflation. When this delicate balance is tipped,
the economy is forced to correct itself.
The Federal sometimes deals with these situations by dumping huge
amounts of money supply into the money market. This helps to keep
interest rates low, even as inflation rises. Inflation is the rise in the prices
of goods and services over a period of time. So, if inflation is increasing,
it means that goods and services are costing more now than they did
before. The higher the level of inflation, the smaller the percentage of
goods and services is which can be bought with a certain amount of
money. There can be many contributing factors for inflation, which
include but are not limited to increased costs of production, higher costs
of energy, and/or the national debt.
12
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 13/34
In an environment where inflation is prevalent, people tend to cut out
things like leisure spending. They also budget more, spend less on things
they usually indulge in, and start saving more money than they did. As
people and businesses start finding ways to cut costs and derail unneeded
expenditures, the GDP begins to decline. Then, unemployment rates will
rise because companies start laying off workers to cut more costs,
because consumers are not spending like they were. It is these combined
factors that manage to drive the economy into a state of recession.
This set of circumstances, coupled with the ability of people to getaccess to greater amounts of loan money due to extremely lax loan
practices, creates a cycle of unsustainable economic activity that will
eventually grind an economy to a near halted existence. You could also
say that a recession is actually caused by factors that might stunt the
growth that is available from the short term benefits to an economy that
can be brought about by such things like spiking oil prices or even war.
And while these are very short term in nature usually, they have been
known to correct themselves quicker than the full blown recessions that
have happened in the past.
13
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 14/34
THE IMPACT OF A RECESSION
The impact of a recession also depends on various factors such as:
How long the Recession Lasts : An important factor is how
long and how deep the recession is. One of the notable
features of the Great Depression was how long the mass
unemployment existed. More recent recessions have been
shorter in duration.
Distribution of the adverse effects : The impact of a
recession is not equally distributed throughout the economy.
A recession will usually affect some sectors much more than
others.
ILL-EFFECTS OF RECESSION
Recession is decelerated phase where everything goes downhill and
everything goes berserk. To reconcile, recession means decline,
downturn, collapse or depression, in common understanding.
14
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 15/34
It signifies a fall in real GDP, lower national income and lower national
output. Recession has negative impact on economic growth and makes
unconstructive impact on the nation.
Recession leads to impulsive rise in unemployment and it can be viewed
in every sector and industry. The problem of unemployment in India is
deep-rooted and it intensified to extra quarters, in phases of recession.
In recession phase, government is always pressurized to large extent as it
comes like an unwanted bad news for them. It results into lower tax
revenues because of lower income tax and lower corporation tax
revenues. Government is expected to spend higher for unemployment
benefits and so it lead to higher borrowing to make both ends meet.
Recession makes a resounding impact on share markets and so it affects
share prices to great extent.It makes share market look shaky and share-
holders often face disappointment. Many a times shares fall sharp as ananticipation of predictable financial disaster, arising out from the fear of
recession.
A recession will reduce the appropriate demand and correspondingly
will enforce pressure on the prices and will rage out price-war in the
market. To retain consumers, the price-wars may lead to decline in rates
and so it might results into lower inflation rates.
Due to recession phase, the investor always feels finicky and shaky to
invest as the fear of acquiring substantial profits increases manifold. The
15
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 16/34
investment in the market becomes more unstable and it affects the
economic growth. It leads to lowering of economic growth and
simultaneously other related aspects of it.
BENEFITS OF RECESSION
Now this comes as a very interesting question, can the dreaded R-word
be beneficial to anyone???
Some great philosopher has said, “There is always a greener side to
every picture...” this is apt in case of recession. But to one’s surprise
Recession, too, is beneficial to some, namely,
Lower interest rates are good for borrowers
Lower inflation rates are good for savers
Sometimes difficult times can force us to re-evaluate our financial
situation. It can make us look for new business avenues and new
ways to cut costs and spending. Although it may be temporarily
unpleasant, the important thing is not to panic but try to make the
best of any situation we find ourselves in.
16
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 17/34
OVERCOMING RECESSION
On the basis of recovery, recession can be classified into two types:
1. The garden variety recession starts when the economy is growing at a
faster rate than the central bank thinks it should. Recovery from the
garden variety recession is straightforward. The central bank, which
created the slowdown by adjusting short-term interest rates upward,
moves them back down again and the economy gradually picks up
speed.
2. The less frequent, but deeper and longer, recessions may have all of
the elements of the garden variety business cycle type, including the
17
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 18/34
central bank’s raising rates to attempt to fight inflation. But the real
defining characteristic of the deeper recessions is what economists have
called an exogenous event , or an external shock . Recovery from deeper
recessions is also straightforward–elimination of the causes of the
economic slowdown. But it’s harder to accomplish, and takes longer to
achieve, because it involves structural adjustment to a new set of
economic realities.
THE PROBLEMS FACED IN RECOVERING
RECESSION
Recession can be overcome by the adoption of the following strategies:
1) Development of new markets:
The rural market gives immense opportunity to enter into thissegment. The strength of the areas should be identified and
accordingly the market should be penetrated. This helps the company
to generate business at a faster pace and also leads to better sales.
18
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 19/34
2) Cash flow must be improved:
The credit period of the traders must be strictly reduced, so that they
pay on time and also demand should be created to compel the
distributers to pay on time. This will reduce the dependency on the
borrowings from the bank and also improve the liquidity crunch.
Thereby the inventory level at distribution level reduced.
3) Emphasis on promotion of the product:
The companies must promote the product to key customers .The key
customers must be serviced properly and their sales closely
monitored. This can helps the company to generate additional growth
which can be was utilized to some extent in promoting the product.
4) Focus on training:
People from different arenas can be trained at different locations and
levels. Sales must be discussed and also up gradation of skills must be
paid attention to. This motivates people to sell more.
5) Improve employee engagement through communication:
Information must be given to the people on regular basis on their
performances. This awareness helps the employee to work better. The
19
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 20/34
employee engagement through communication is an important tool in
making the people to work harder.
6) Introduction of new products:
New products can be a lifeline in recession. This helps the company
to enter into new therapeutic segments. Thus introduction of newer
products can bring growth. This can be done in the following ways:
1. Encourage exports
2. Provide Accessible Credit for Business
3. Improve Tax Collection
4. Set Aside Large Amount for Social Welfare
5. Control Expenditures in Other Fields
6. Improve Tourism Sector
THE STORY OF U.S RECESSION
In US, a boom in the housing sector was driving the economy to a new
level. A combination of low interest rates and large inflows of foreign
funds helped to create easy credit conditions where it became quite easy
for people to take home loans. As more and more people took home
20
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 21/34
loans, the demands for property increased and fueled the home prices
further. As there was enough money to lend to potential borrowers, the
loan agencies started to widen their loan disbursement reach and relaxed
the loan conditions.
Since it was a good time and property prices were soaring, the only aim
of most lending institutions and mortgage firms was to give loans to as
many potential customers as possible. The practice of checking the
customer’s repaying capacity was ignored in many cases. As a result,
many people with low income & bad credit history or those who come
under the NINJA (No Income, No Job, and No Assets) category were
given housing loans in disregard to all principles of financial prudence.
Many homeowners used the increased property value to refinance their
homes with lower interest rates and take out second mortgages against
the added value.Bubble that burst…
However, as the saying goes, “No boom lasts forever”, the housing
bubble was to burst eventually. Overbuilding of houses during the boom
period finally led to a surplus inventory of homes, causing home prices
to decline beginning from the summer of 2006. Once housing prices
started depreciating in many parts of the U.S., refinancing became more
difficult. In the US, an estimated 8.8 million homeowners – nearly
10.8% of total homeowners – had zero or negative equity as of March
2008, meaning their homes are worth less than their mortgage. This
21
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 22/34
provided an incentive to “walk away” from the home than to pay the
mortgage.
During 2007, nearly 1.3 million U.S. housing properties were subject to
foreclosure activity. Increasing foreclosure rates and unwillingness of
many homeowners to sell their homes at reduced market prices
significantly increased the supply of housing inventory available. Sales
volume of new homes dropped by 26.4% in 2007 as compare to 2006.
Further, a record nearly four million unsold existing homes were for sale
including nearly 2.9 million that were vacant. This excess supply of
home inventory placed significant downward pressure on prices. As
prices declined, more homeowners were at risk of default and
foreclosure.
This is how matter complicated
Unfortunately, this problem was not as straightforward as it appears. For
original lenders these subprime loans were very lucrative part of their
investment portfolio as they were expected to yield a very high return in
22
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 23/34
view of the increasing home prices. Since, the interest rate charged on
subprime loans was about 2%, lenders were confidant that they would
get a handsome return on their investment.
With stock markets booming and the system flush with liquidity, many
big fund investors like hedge funds and mutual funds bought such
portfolios from the original lenders. The subprime loan market thus
became a fast growing segment. Major (American and European)
investment banks and institutions heavily bought these loans to diversify
their investment portfolios. Most of these loans were brought as parts of
CDOs (Collateralized Debt Obligations). CDOs are just like mutual
funds with two significant differences. First unlike mutual funds, in
CDOs all investors do not assume the risk equally and each participatory
group has different risk profiles. Secondly, in contrast to mutual funds
which normally buy shares and bonds, CDOs usually buy securities that
are backed by loans (just like the MBS of subprime loans.)
Owing to heavy buying of Mortgage Backed Securities (MBS) of
subprime loans by major American and European Banks, the problem,
propagated into the word’s financial markets.
As the home prices started declining in the US, sub-prime borrowers
found themselves in a messy situation. Their house prices were
decreasing and the loan interest on these houses was soaring. As they
could not manage a second mortgage on their home, it became very
difficult for them to pay the higher interest rate. As a result many of
23
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 24/34
them opted to default on their home loans and vacated the house.
However, as the home prices were falling rapidly, the lending
companies, which were hoping to sell them and recover the loan amount,
found them in a situation where loan amount exceeded the total cost of
the house. Eventually, there remained no option but to write off losses
on these loans.
The problem got worsened as the MBS lost their value. Falling prices of
CDOs dented banks’ investment portfolios and these losses destroyed
banks’ capital. The complexity of these instruments and their wide
spread to major International banks created a situation where no one was
too sure either about how big these losses were or which banks had been
hit the hardest.
Mayhem in the banks….
Global banks and brokerages have had to write off an estimated $512 billion in subprime losses so far, with the largest hits taken by Citigroup
($55.1 billion) and Merrill Lynch ($52.2 billion). A little over half of
these losses, or $260 billion, have been suffered by US-based firms,
$227 billion by European firms and a relatively modest $24 billion by
Asian ones.
Despite efforts by the US Federal Reserve to offer some financial
assistance to the beleaguered financial sector, it has led to the collapse of
Bear Sterns. Bear Sterns was bought out by JP Morgan Chase with some
help from the US Federal .The crisis has also seen Lehman Brothers file
24
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 25/34
for bankruptcy. Merrill Lynch has been bought out by Bank of America.
Freddie Mac and Fannie Mae, two giant mortgage companies of US,
have effectively been nationalized to prevent them from going under.
Reports suggest that insurance major AIG (American Insurance Group)
is also under severe pressure and has so far taken over $82.9 billion so
far to tide over the crisis.
From this point, a chain reaction of panic started. Since banks and other
financial institutes are like backbone for other major industries and
provide them with investment capital and loans, a loss in the net capital
of banks meant a serious detriment in their capacity to disburse loans for
various businesses and industries. This presented a serious cash crunch
situation for companies who needed cash for performing their business
activities. Now it became extremely difficult for them to raise money
from banks.
What is worse is the fact that the losses suffered by banks in the
subprime mess have directly affected their money market the world over.
EFFECT OF RECESSION ON GLOBAL ECONOMY
The continuing development of the crisis has prompted in some quarters
fears of a global collapse. The financial crisis yielded the biggest
banking shakeout since the savings-and-loan meltdown. The United
Kingdom had started systemic injection, and the world's central banks
were now cutting interest rates. UBS quantified their expected recession
25
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 26/34
durations on October 16: the Euro zones would last two quarters, the
United States' would last three quarters, and the United Kingdom's
would last four quarters.
The Brookings Institution reported in June 2009 that U.S. consumption
accounted for more than a third of the growth in global consumption
between 2000 and 2007. With a recession in the U.S. and the increased
savings rate of U.S. consumers, declines in growth elsewhere have been
dramatic. For the first quarter of 2009, the annualized rate of decline in
GDP was 14.4% in Germany, 15.2% in Japan, 7.4% in the UK, 18% in
Latvia, 9.8% in the Euro area and 21.5% for Mexico.
Some developing countries that had seen strong economic growth saw
significant slowdowns. For example, growth forecasts in Cambodia
show a fall from more than 10% in 2007 to close to zero in 2009, and
Kenya may achieve only 3-4% growth in 2009, down from 7% in 2007.According to the research by the Overseas Development Institute,
reductions in growth can be attributed to falls in trade, commodity
prices, investment and remittances sent from migrant workers .This has
stark implications and has led to a dramatic rise in the number of
households living below the poverty line, be it 300,000 in Bangladesh or
230,000 in Ghana.
By March 2009, the Arab world had lost $3 trillion due to the crisis. In
April 2009, unemployment in the Arab world is said to be a 'time bomb'.
In May 2009, the United Nations reported a drop in foreign investment
26
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 27/34
in Middle-Eastern economies due to a slower rise in demand for oil. In
June 2009, the World Bank predicted a tough year for Arab states.
EFFECT ON ASIAN ECONOMY
While beginning in the United States the late 2000s recession spread to
Asia rapidly and has affected much of the region. Asia’s financial sector
in 2009 was relatively better compared to other emerging economies.
The five critical areas of risk for Asia’s financial markets:
1. Asset markets witnessed corrections
2. Government debt continued to grow
3. External debt remained a risk
4. Easing external balances
5. Strains in credit access and the banking sector
THE OUTLOOK OF VARIOUS SECTIONS OF ASIA
1. Mainland China
In China, the GDP growth for 2008 was 9.7% and dropped to 8.5% in
2009. A struggle was underway to see who would swallow the losses on
27
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 28/34
US Agencies and Treasuries. In November, China announced a package
of capital spending where four trillion Yuan ($586 billion) was spent on
upgrading infrastructure.
2. Hong Kong
The Hong Kong economy officially slid into recession in the final
quarter of 2008. Hong Kong is an economy built on services, retail,
tourism, transport and financial industries. The Hang Seng Index lost
over 60% of its value, property market lost over 40% in value and
unemployment is at a record high of 4.8%.
3. Japan
In Japan exports in June declined for the first time in about five years
falling by 1.7%. Exports to the United States and European Union fell
15.4% and 11.2% respectively. The decline in exports and increase in
imports cut Japan's trade surplus $1.28 billion a decline of 90% from the
previous year.
4. Malaysia
In January 2009, Malaysia has banned the hiring of foreign workers in
factories, stores and restaurants to protect its citizens from mass
unemployment amid the global economic crisis.
5. Singapore
28
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 29/34
Singapore's economy saw its biggest drop in five years, falling by 6.6%;
however, the Managing Director of Singapore's central bank said a
technical recession was not likely.Singapore cut its 2008 GDP forecast
to between 4 and 5 from 4 to 6%before and then again down to 3%.
6. India
India's economy benefited from recent high economic growth which
declined greatly due to the global economic crisis. Economic growth in
India during FY2008-09 stood at 6.7%.The global crisis had less impact
of India because exports account for only 15% of India's GDP, less than
half the levels of major Asian economic powers such as China and
Japan. Though he ended up being wrong, the former Indian Finance
Minister P. Chidambaram once boasted that he expected India's
economy to "bounce back" to 9% during FY2009. India's Prime Minister
Manmohan Singh said that the government will take measures to ensurethat the economic growth bounces back to 9%.The Asian Development
Bank predicted India to recover from weakening momentum in 4-6
quarters.
7. Pakistan
In Pakistan the central bank's foreign currency reserves is as little as $3
billion, sufficient for a single month of imports. Corruption and
mismanagement have combined with high oil prices to damage
29
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 30/34
Pakistan's economy. Pakistan's rupee has lost more than 21 per cent of
its value in 2008 and inflation is at 25 per cent. President Asif Ali
Zardari claimed Pakistan needed a bailout worth $100 billion which he
was expected to ask for at a meeting in Abu Dhabi in November.
CONCLUSION AND MY SUGGESTION
After understanding the dreaded R-word in depth many facets of
recession unfolded. We understood that recession is something that
cannot be promptly avoided as it is a part of the business cycle.
30
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 31/34
However, we list below some of the suggestions that we have come up
with …
1) Encourage exports:
The government should focus on this business segment because it
would infuse necessary foreign currencies.
2) Provide Accessible Credit for Business:
Business should be encouraged by the government to compensate for
unemployment. More businesses mean more jobs for the people. Or,
at least, source of income for the family.
3) Improve Tax Collection:
Taxes can finance government expenditures such as provision of
credit to businesses or budgets for social welfare.
4) Set Aside Large Amount for Social Welfare:
This will reduce panic and riots and restore confidence in the people.
Positive outlook will be developed which will also enable people to
get back on their feet and start anew.
5) Control Expenditures in Other Fields:
31
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 32/34
Slash budgets on unnecessary expenditures in other areas - military,
legislative, executive, other branches.
6) Improve Tourism:
Lure more tourists to the country. More tourists mean more money
injected to the economy. Businesses will naturally sprout even small
businesses in order to cater to the needs of these tourists.
7) Improve funds:
The main problem is the lack of funds hence; we must encourage the
injection of money back to the country.
32
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 33/34
BIBLOGRAPHY:-
DEFINITON AND CONCEPT OF RECESSION:
http://economics.about.com/od/economicsglossary/g/recession.htm
http://recession.org/definition
http://www.investorwords.com/4086/recession.html
http://economics.about.com/od/economicsglossary/g/recession.htm
SHAPES OF RECESSION:
http://en.wikipedia.org/wiki/recession#Type_Of_Recession_Or_Shape
TYPES OF RECOVERY FROM RECESSION:
http://practicalstockinvesting.com/2009/12/30/a-2010-equity-portfolio-
two-types-of-recession-two-types-of-recovery
CAUSES AND EFFECTS OF RECESSION:
http://theviewspaper.net//the-causes-and-effect-of-recession
RECENT US RECESSION:
http://www.economicshelp.org/blog/recession/why-is-us-in-recession/
33
8/3/2019 Rec Cession Main
http://slidepdf.com/reader/full/rec-cession-main 34/34
www.usgovinfo.about.com
THE IMPACT OF A RECESSION:
http://www.indiastudychannel.com/resources/56851-Impact-
recession.aspx
IMPACT OF RECESSION ON GLOBAL ECONIMY:
http://en.wikipedia.org/wiki/recession#Global
EFFECT OF RECESSION ON ASIAN ECONOMY:
http://en.wikipedia.org/wiki/Late-2000s_recession_in_Asia
IMPACT OF RECESSION ON MALAYSIA:
http://siteresources.worldbank.org/INTEAPHALFYEARLYUPDATE/R
esources/550192-1238574864269/5976918-
1239010682147/update_april09_fullreport.pdf