Kathmandu. US President Donald Trump has created a stir in stock markets around the world by announcing tariffs. But does this mean that the world is heading towards a recession?
First of all, it is important to note that whatever happens in the stock market is independent of changes in the economy. That is, a decline in stock prices does not always mean an economic crisis. However, sometimes it does. A decline in a company’s stock market price indicates a change in the assessment of its future profits.
In fact, the market has predicted that the price of things will increase after the tariff increase. Due to this, the profits of companies will decrease. However, this does not mean that a recession will definitely happen. After Trump’s tariff announcement, the possibility of this happening clearly remains.
What is the definition of a recession?
A recession is when an economy experiences two consecutive quarters of declining spending or exports. The UK economy grew by 0.1% between October and December last year. Last month’s figures showed a similar decline in the economy in January.
The first estimate of how the British economy performed in February will be released this Friday. So as far as the UK is concerned, we will have to wait for more data.
##Stock market crash
It is clear that the fall in stock markets around the world has caused worrying damage. Banks are generally seen as representatives of the economy. “The only thing that’s holding my breath is the decline in bank stocks,” said one market expert.
HSBC and Standard Chartered are two big banks that act as a bridge between the Eastern and Western economies. The share prices of both these important banks have fallen by 10 percent. Later, some buying helped both recover.
The concern is not just about the turmoil in the stock market. The concern is with the commodity exchanges. They are also showing warning signs. The prices of copper and oil are considered barometers of the global economic health. Copper and oil prices have fallen by more than 15 percent since Trump announced the tariffs.
When was the last recession?
Economic recessions are not a common occurrence in the world. The duration of a ‘real recession’ has become much shorter.
- There have been three such periods so far. Which is called a recession –
- The recession of the 1930s is called the ‘Great Depression’.
- The economic crisis of 2008 was called the ‘Global Financial Crisis’.
- The global economy came to a standstill in 2020 due to the Covid pandemic.
Something similar will happen this time too The chances are now slim. However, most economic analysts still fear a recession in the US, UK and the European Union. –Translated from the BBC
