Domestic Recession Due to Global Recession written by 20121 Jung Kyumin

Global Recession

Economic growth forecasts for major economies such as the European Union, Japan and China, as well as the U.S.

They have been revised due to concerns over a rapid slowdown in the manufacturing sector, the U.S.-China trade war, and the No-deal Brexit.

This raises concerns over a global economic slowdown.

One of the biggest causes of the global recession include higher interest rates in major countries with excessive fiscal deficits. Another cause for the global recession is domestic and protectionary economic policies. 

Also, it has been worsened due to damage from trade wars, terrorism, and immigration problems. 

The sharp global declines in commodity production and consumption due to aging has also contributed. Due to these various factors, the world economy is currently slipping into a slump. 

Bloomberg reported that there is a growing fear of so-called recession among economic experts.

 

 Domestic Recession

The countries facing the biggest economic difficulties are emerging countries such as Russia, India, Brazil, and Indonesia, as well as Korea, which are directly hit by the recession.

The Korean government has used the word "poor" in describing its recent economic trends report for five months since April. It is the first time that the report has been described as "poor" for five months in a row. 

In its August 2019 report, the Ministry of Strategy and Finance explained the Korean economy in the second quarter rose smoothly with its production, but the sluggish trend of exports and investment continued.

Domestic sales of Korean passenger cars fell 3.7 percent in July compared to the same period last year. Additionally, sales at department stores and discount stores also shrank 3.4 percent and 10.7 percent, respectively.

The downward trend of export indicators is also evident. According to the Bank of Korea, the current account balance in the first half of this year fell 24.6 percent, or $7.13 billion, compared with $28.9 billion in the first half of last year. 

Amid the intensifying trade dispute between the U.S. and China, the impact of Japan's export regulations on Korea is negatively affecting all indicators.

The global economic downturn has caused the current domestic economy to deteriorate. 

As such, recovery of the domestic economy is essential, and it seems necessary to take fundamental measures to strengthen the Korean economy, such as deregulation and labor market flexibility, as well as short-term prescriptions such as interest rate cuts.