The Other day, IMF Chief said that we are in a recession and this one is going to be worse than 2009. Due to the Corona Outbreak, most of the countries are in the lockdown mode.
This lockdown affected the GDP of many countries. In the week ending March 21, the US saw a massive spike of 3 Million Unemployment claims.
IMF claimed that 80 countries requested for emergency funds. Recently, Trump Signed relief package of 2.2 Trillion dollars to support the USA economy which is badly affected by the Pandemic. Not only the USA, India too announced the relief fund of 1.7 lakh crore.
Since most of the countries all in lockdown mode, many industries are getting affected. Companies are getting closed which stopped a lot of production. People are already losing jobs.
From 2019 RBI, FED and other central banks were cutting down the interest rate to boost the economy. No one expected this pandemic. During the low-interest periods, the one who took loans can’t repay it back because of the job cut. Not only common people many companies who took the loan for the expansion of the business may face problems with loan repayment.
The whole world is standing on a huge debt of 253 Trillion Dollars. You can check the live debt here. If the relief funds released by the countries can’t solve the economic problems, then it will become an extra burden for the world. Many will think like printing more money can solve the debt problem but it won’t. That will affect the world in another way which is more worst than this.
- Covid -19 Pandemic affected most countries GDP.
- Lockdown resulting in Job cut because of non-operating industries.
- People and Companies may fail to pay loans which were taken during the times of low-interest rates.
- Current World debt is 253 Trillion Dollars.
- 80 Countries already requested emergency funds from the IMF.
- Whole world economy slowed down.
The Reason for this recession may be the Covid -19 Pandemic or the over debt but at the end, the world is going to suffer from Debt Crisis.
If you want to know how decreasing interest rate boost the economy. Check out this article – Why RBI is decreasing Interest Rates?