At the recent summit of G20 held in Moscow it was agreed by all the member nations that the world economy is still in a very fragile condition, because of the monetary crisis of United States of America. According to many finance and economic experts, USA’s financial market is hugely responsible for the present economic condition. What started at the backbone affected even the tip of the finger. The crisis became far-reaching engulfing the entire global economy leading to recession and resultant unemployment.
International Monetary Fund Managing Director Christine Lagarde aptly commented that the only solution to the problem could be generation of more work, which still does not guarantee any fast recovery. Many economists have already pointed out that during such situations government often reduce the rate of spending during such economic calamity. While on the contrary, they should spend more to motivate growth and increase service.
The other members of the G20 nations put forward a different view. As contrary to the established view of the above-mentioned economists, the conservatives have a different approach towards the problem. They argue that maintaining austerity at the time of recession by the government is an ideal way to handle it. The government of the recession-hit nation should cut down expenditure and avoid investment. This step would inspire confidence of the private sector who would invest with a renewed vigor. Thereby increasing market activities and creating the long desired employment.
To cite as example, the liberal school of economists uphold the economic condition of the United Kingdom. During its peak recession hour it adopted severe economic strategies of not investing. The policy boomeranged and adverse situation evolved, generating only redundancy and low investment.
A senior official of United Nations commented that no matter how much contrary belief there is between different economists, of one thing, a unanimous decision has been reached, that the only way to solve such a situation is through qualitative and quantitative monetary policies.
It is however true that regressive economic condition of other countries can also slower down the growth rate of global economy. Namely, China and Brazil; could bring down the fiscal condition. Budding Asian markets may have avoided the lashing waves of recession, which has engulfed the developed countries to various degrees. Nevertheless, they too have been moderately affected in the field of raw materials and consumer products.
Few countries are already taking safety precautions to avoid further recession hassle and to recover from the existing one. Shinzo Abe, The Prime Minister of Japan by has now proposed progressive economic procedure. The United States of America not far behind. The fiscal resurgence has already begun.
General acknowledge in the G20 summit is that the recovery is still at a distance. The greatest barrier here seems to be the immense loss of capital for countries like Japan and United States of America, two most important manipulator of global economy. The G20 at the summit mainly worked out ways and means to find out and attend to the crisis at hand, which still remains buoyant.
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