World economy - a bird\\\'s eye view

The overwhelming impact of recession that recently rocked the world, particularly the developed economies, is being overcome judiciously. Nations pushed on the back foot, have almost recovered the shock, solitary exception being Greece which is still deep down in the dungeon and that too for non-economic reasons. With overall situation calming down, an apprehension whether the crisis is going to bounce back is being contentiously debated around the world. Economists are divided in their opinion on the issue. Those in favour of a possible recurrence, are referring to the crisis of 1929-30 and those against are of the opinion that in an age of globalisation, it is less likely to re-emerge.
The purpose of this write-up is to examine such possibility subsequent to corrective measures adopted by the most affected countries and those dependent on them. It is not, however, possible to take all countries into consideration and analyse the matter in the space of one article. For this purpose, focus has been on leading economies of the world and a few Asian countries, including our neighbours.
To start with, USA has almost fully recovered from recession and is roaring again. The US stock market that nosedived to the bottom in 2009, is now regained its strength. For example, NYSE increased up to 165 per cent and Dow Jones industrial average increased by more than 165 per cent. Rate of unemployment has gone down to 6.1 per cent and inflation has declined. It is not only due to the strong internal economy of USA, but global economic environment also played a supportive role. For example, reduction in oil prices has helped the US economy substantially to recuperate. On the other hand, Russia, one of the largest economies of the world, is now in trouble economically due to situation in Ukraine. The country could not also achieve projected growth target of 2.0 per cent in 2015.
Reduction in oil prices has helped Italy, the third largest economy in euro zone, to come out of recession. Despite some social problems, the second largest economy of the European Union, France is steadily recovering from the effects of the crisis. Economists argue that as the combined productivity of European Union is expected to be positive, there is no cause for concern.
In the same way, other European economies are being benefited by low fuel price, stable global productivity and declining euro value and more significantly by the Union's healthy economic policies.
Greece alone finds it difficult to come out of its bankruptcy crisis more due to its stubbornness against bowing to pressures from powerful EU countries. The fact that Greece did not join the EU at the beginning started taking its toll. Furthermore, corruption, mismanagement and immaturity in economic management have further intensified the crisis. Thankfully, the combined efforts of EU countries in the form of bail out proposals have given rise to new hopes. Had Greece been active in fighting corruption and been careful to stand on its own feet from the beginning, it would have been a different story.
Looking at another leading economy of the world China, we find that its economy was hardly affected by the recent recession and has been progressing steadily till an abrupt fall in stock prices rocked the world capital market. The disastrous plunge in stock prices on 29 August 2015 has been termed as a black Monday. Stock values went down by 7.33 per cent and currency exchange value by 0.13 per cent. The necessity to devalue the Chinese currency had actually been on the cards for some time and it was done so out of necessity. But disaster in stock market may create an adverse situation, if not a potentially dangerous one. Vulnerability of stock market may weaken its financial management. If China is able to successfully overcome the problem and maintain its export trend through devaluing its currency, the GDP (gross domestic product)  growth is likely to be close to the projected figure of 6.7 per cent in spite of the debacles.
Although Bank of England Governor recently announced that Britain has the internal strength to absorb the effects of stock market upheaval in China, the fact remains that  any long term problem in China will be a cause of concern for USA and Britain. However, China's participation in British economy is comparatively limited, but USA imports 45 per cent of consumer durables from China. China has interests in US bond market also. Since interests of leading economies are inter-twined, it is very likely that the risks of a resurging crisis will be dashed through joint and concerted efforts.
Indian economy, on the other hand, is developing fast and efforts are underway to accelerate the GDP growth further. Management is being tuned to absorb greater risks. 1.5 per cent out of 2.2 to 2.3 per cent of the new work force has joined the labour market. India is now better placed in terms of macroeconomic growth compared to last two years. It has been able to reduce revenue deficit by 4 per cent so far in 2015. But there is a lot to be accomplished in agriculture sector. Employment in agriculture increased by only 1 per cent in 2014-15 and the sector needs increased investment. India should pursue sound management and a sustainable development policy in agriculture alongside proper implementation of industrial policy. The exchange rate of Indian currency has declined.  
Dark clouds hovering over Japanese economy has largely disappeared. High rate of taxation prevalent in 2014 has been reduced. At the same time, growth in production in 2015 has been projected as 0.75 per cent. Growth of exports has been calculated on the basis of reduced currency value. By the middle of 2015 employment has slightly increased and rate of unemployment has declined. In short, Japanese economy has started to gain in strength and the trend should continue.    
Saudi Arabia is passing through a phase of change. Reduction in oil price warranted changes in revenue policy. Foreign exchange reserve was US$730 billion which was worth 3 years' imports. Import of manpower is being reduced and alongside reducing dependence on oil revenues, higher emphasis is being given to private investment. In fact, change started occurring in Saudi economy during the regime of King Abdullah. Saudi nationals started entering the job market and the number of entrants in last four years is more than the work force of last 40 years. 600,000 Saudi nationals entered the labour market in 2009 and another 2 million are expected to enter private job market during the next 10 years. The new Saudi King however is resorting to IMF assistance in a bid to further develop the economy.
On the other hand, the upward trend in Malaysian economy has slowed down in the second quarter of the current year. Growth has moved down to 4.9 per cent from 5.6 per cent of the corresponding period of the last year. Continued political unrest is dragging back the pace of growth.
The condition of Thai economy is also far from being satisfactory. Export has declined. Foreign investment has gone down. Loans disbursed for high rise buildings are creating problems for the banking sector. Currency value has decreased. Nepalese economy has been devastated by recent earthquakes. On the other hand, Indonesian economy is gaining in strength. GDP growth rate is likely to exceed 5.0 per cent. Volume of trade is increasing although subsidy on fuel was reduced. Although Myanmar has stepped up its development efforts, ethnic problems, lack of democracy and Rohingya issue have created potholes in market management and the country is not being able to bolster economic development.
If we analyze the situation in Bangladesh, we shall find out that it is well placed in terms of growth and annual GDP growth to fight the menace successfully. The growth rate is likely to be around 7.0 per cent in 2015-16. Inflation is coming down. However, following Arab spring, employment opportunities for Bangladeshi workers in Saudi Arabia, UAE and Middle Eastern countries have shrunk. Therefore, investment in infrastructure, education and health will have to be stepped up to create additional employment opportunities at home. An entrepreneur class will have to be developed. Pharmaceuticals and tanneries should be given priority alongside RMG industries. According to natural laws of economics, the faults and failings in global market management are automatically corrected. That is how ups and downs take place.
In conclusion, since corrective measures, including currency devaluation to stabilise national income, have been taken and a well conceived plan is being  implemented in affected countries, the possibility of global recession returning appears remote.
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