Abstract:
The US Subprime Crisis has not only resulted in US economy recession but its ripple effects has touched the countries like UK, Spain, Japan and Singapore as well. Emerging economies like China and India are also affected by the negative influence of the US Subprime Market Crisis. At present it seems that this subprime crisis of US is going to generate a global recession by affecting the major countries of the world.
The US Subprime Market Crisis has already resulted in US Economy Recession. The countries like Britain, Spain, Japan, Singapore are going to bear the negative effects of US economy recession. Emerging economies like China and India are also suffering from the ill effects of the US Subprime Crisis. All these countries together form a major part of the global economy. So, it can be said that the US Subprime Market Crisis is going to affect the global economy as a whole.
As all the countries mentioned above are being influenced in a negative way by the US economy recession, it is expected that the growth rate of the world economy would experience a significant fall.
According to Alan Greenspan, the Former Federal Reserve Chairman, Global Recession is surely going to take place in some form or other.
As the US Federal Reserve is opting interest rate cuts in order to fight with the problem of subprime crisis, countries like UK and Japan are also introducing interest rate cuts in their country. India is also thinking over introducing a cut in interest rate in its next monetary policy. This is because all these countries are speculating that cut in US interest rate will result in capital inflow in their economies which will in turn result in high levels of inflation.
This problem of US Subprime Market is generating Credit Crunch in some economies and accelerating Global Recession in a way. The Economy of Singapore has already entered into recession. The total factory output of the country has got reduced and export of electronics goods has declined significantly. The real estate sector of the country is also experiencing a slow down.
The UK economy is also suffering from the problem of credit crunch as the rate of loan taking for home purchase has been recorded at a two year low.
Other than Japan, China, Singapore, UK, Spain there are other countries like Germany which are showing signs of slow downs , thereby accelerating the pace of global recession.