Global Economic Recession

Far-Reaching Economic Recession



In mid-2008, we might be facing an
economic recession in
global proportions. There are important factors that caused this economic
slowdown. These include the high oil prices which will lead to high prices of
food. Since food production is dependent on the production process and
transportation process on oil. This will be combined with the credit crisis and
an increase in unemployment.



As early as January of 2008, the International Monetary Fund (IMF) already
predicted that global economic growth will decline. It would be greatly affected
by the United Stated Economy.



The IMF mentioned that the economic recession in the United States will be
affected greatly by the financial market conditions and the continuing
correction in the U.S. housing market. IMF predicted that the United States will
have a mild recession in 2008 but will recover, although modest, in 2009.



Meanwhile, global growth would achieve little recovery in 2009, there is a 25
percent chance that the global economy would record 3 percent or less of growth
in 2008 and 2009. This is already like saying that the world will encounter a
recession.



United Nations has also predicted the same thing to happen. According to UN, the
world economy growth was remarkable in 2007. There are more than 100 economies
tat reported to have an increase of 3 percent. Meanwhile, developing countries
are also showing promises. The economic growth average in developing countries
was almost 70 percent.



But UN Conference on Trade and Development stated that there is clear disaster
or danger for the world economy to standstill in 2008. The UN report stated that
this economic standstill will hit many poor nations and would definitely end the
boom in economic growth.



The United States economic decline on 2008 will greatly affect the global
economy. Being one of the largest economy in the world. Some reckless practices
has brought the looming recession in the United States; no down payment, no
verification of income/ assets/ jobs, interest rate mortgages, negative
amortization, and teaser rates. Approximately 50 to 60 percent of the loans made
in the banks were done through these reckless practices.



Economic recessions are not only distinct in the United States. European
countries are also getting affected by economic slowdown. Denmark was confirmed
to be in a recession.
The economic growth in Denmark declined by 0.6 percent in the first quarter of
the year. While Estonia and Latvia both entered recession in the second quarter
of the year. While Sweden showed zero growth in the second water of 2008.



The British economy is also being hit by rising oils prices and credit crisis.
Telltale signs that the British economy is entering recession, when the housing
market fell in 2007. In the next quarter, the housing market went down twice its
former figure. Currently the economic growth in United Kingdom is zero. This
would be next to the negative economic growth that happened in second quarter of
1992. The current slowdown has ended 16 years of continuous economic growth, the
longest period of economic expansion in Britain since the 19th century.



Economic crisis is also happening in New Zealand whose economy’s growth declined
by 0.3 percent. Meanwhile in Australia, consumer confidence fell into a 16 year
low economic growth in July. South Africa is being warned that it will enter a
recession by this year. Japan has experienced a drop in economic growth, the
first time in five years. Meanwhile, Canada’s economic growth has shrank in the
first quarter of the year.

 

Benefits of an Economic Recession

Benefits of an Economic Recession



A lot of people think that an economic recession is bad. While that is partly
true, there are certain benefits.



When the economy is in recession, it won’t be long that you will get a check
from the Internal Revenue Service or IRS. This may amount from $300 to $1,200
which is the government’s way to help the economy.



If you are wondering how much you will get, compute for this using the economic
stimulus tax calculator. This is considered to be a rebate so if you didn’t get
it this year, you will in 2009. This was done when the economy was in recession
in 2000 but most of the checks came in when the economy was recovering a year
later.



During an economic
recession, majority of bonds and stocks are undervalued. This means it is
bargain to buy them right now so go for it! Before you go on a shopping spree,
find out which company’s shares will do better once the economy recovers. With
that in mind, it will be easy to decide which one you should invest in. It is
also possible to buy new homes when the prices have gone to an all time low.



One solution to curb the economic recession is for the Federal Reserve to lower
interest rates. This means that as long as you have good credit ratings, you
will be able to borrow money from the bank.



As a consumer, an economic recession brings tax breaks. What happens is that you
don’t have to pay the IRS that much this year because of a deduction for private
mortgage insurance which happens to be an extension of the sales tax write off
and also a boost in the alternative minimum tax exemption amount.



If you are still working, an economic recession may also increase retirement
account limits. You can do this by using your rebate check to turbocharge your
retirement savings and investing this in a Roth or Traditional IRA. Some people
have decided to invest it in both.



Should your gross income is $100,000 and below, you can now roll over your
401(k) directly into a Roth IRA without having your funds go through a Rollover
Traditional IRA first. But if your income is above $100,000, just wait until
2010 when the income limit disappears so that you too can invest this into your
retirement account.



There are people who say that an economic recession is also good for the
environment because the consumer will be forced to cut costs. People will more
likely trade in their sports utility vehicles or SUV’s for more fuel efficient
vehicles. This in turn will reduce the number of carbon gases that are released
into the air. Unfortunately, industries won’t be able to do the same.



Instead of going to the store to buy something you like, more people will order
and purchase the same items online thus increasing business over the web. The
same goes for advertising because it is much cheaper to do this online that
billboards or newspapers.



There are benefits to an economic recession even if many of us see that nothing
good comes out of it. The only consolation is that it is only temporary and the
economy will recover by late this year or early next.