Professional Documents
Culture Documents
Presented By:
Rahul Kumar Tiwari
MBA-2nd Sem
IMT, Faridabad
GLOBAL RECESSION
As sure as the spring will follow the winter, prosperity and economic growth will
follow recession.
INTRODUCTION
In economics, the term recession
generally describes the reduction
of a country's gross domestic
product (GDP) for at
least two quarters.
“a period of reduced economic activity.”
Cont....
a significant decline in the economic activity spread across
the economy, lasting more than a few months, normally
visible in real GDP growth, real personal income,
employment , industrial production, and wholesale-retail
sales
Attributes of recession
In macroeconomics, a recession is a negative
real economic growth, for two or more
successive quarters of an year.
A recession has many attributes that can occur
simultaneously and can include declines in
coincident measures of activity such as
employment, investment, and corporate
profits.
Predictors of recession
In the U.S. a significant The three-month
stock market drop has change in the
often preceded the unemployment rate and
beginning of a initial jobless claims
recession.
Inverted yield curve
Index of Leading
(Economic) Indicators
History of recession
Great Depression - August 1929 to September 1939:
longest (and deepest) recession of the 20th century
January-July 1980 and July 1981-November 1982: 2
years total
July 1990-March 1991: 8 months
March 2001-November 2001: 8 months
December 2007-March 2009: 15 months and
counting.
US Crisis Hits India
“When the United States sneezes, the rest of the world
may well catch a cold....” Rich Miller.
US faced major crisis because of:
Sub prime mortgage crisis.
Rising oil prices
Global inflation
High unemployment rates
A declining dollar value.
Capital flight in emerging markets.
Causes Of Recession 2007-2009
Currency crisis
Energy crisis
War
Under consumption
Overproduction
Effects of recession
Bankruptcies
Credit crunches
Deflation
Foreclosures
Unemployment
Difficulty in borrowing
Unemployment
Falling profitability
Falling stock market
Decline in consumer confidence
Impacts Of Slowdown in India:
A global recession would take a slowdown in global
growth to three percent or less -IMF
The slowdown in US and other developed nations is
definitely hurting Indian growth story.
The signs of this can be evidenced from the
tumbling share market (BSE & NSE) which shed
more than 50% since Jan 08.
Impacts Of Slowdown in India:
Sectors affected till now are almost all, reason
behind this is:
External Trade of India : 40% of GDP
FII`s Investment in share market upto Jan 08:
US $ 65 Billion
FDI in India (Jan 08) : US $ 50 Billion
Estimates of Annual GDP has been lowered to
7.5% from 9%
Impacts Of Slowdown in India:
70% of IT export is to US, out of which 40 % is to
Finance Sector
Many international garment brands are made in
Tirupur” factories in “Tamilnadu” in “India”.
From Surat in Gujarat, Diamonds are exported to
US and other countries
All these are few examples how India is going
to get affected
Strategies To Deal With……
Survival strategies
Revaluate your entire pricing structure.
Go bargain hunting.
Consider strategic investments.
Monitor your cash flow.
Invest in sales and marketing technology.
Survival strategies (Cont.)
Avoid Underutilisation of employees.
Be slow to hire and quick to fire new employees to
keep only the best.
Talk to your bank and other sources of capital.
Think strategically!!!
5 important survival rules that allow you to
profit even in recession
Recession Survival Rule #1: Sit in an Exit
Row. (Invest for short duration)
Recession Survival Rule #2: Bet on Income.
(Invest where you earn dividend)
Recession Survival Rule #3: Build in Safety.
(Bonds are safe game)
Contd…
Recession Survival Rule #4: Think booze, bombs,
and butts. (Be it Sin stocks, gaming firms, or
defense contractors - stick with firms that have lower
debt, steady sales growth, and that are posting strong
earnings.)
Recession Survival Rule #5: Hedge Your Bets.
((ETFs) as the Rydex Inverse S&P 500 Strategy
Inverse Fund (RYURX), which is designed to rise in
value by 1% for every 1% the S&P 500 falls.)
Recession survival strategies for
business
An Internet presence is crucial — as Internet sales are likely
to see a significant increase due to rising fuel costs and a desire
by consumers to consolidate excess travel spending.
Risk Management.