Saturday, 1 October, 2022

World Economic Crisis: How to Solve It

M. Matiur Rahman

World Economic Crisis: How to Solve It
M. Matiur Rahman

Economic crisis is prevailing in our present day world. There is hardly any country which is not affected by this crisis. Now let us try to know the meaning of economic crisis. Economic crisis refers to the crisis connected with the economy of a country when its trade, industry and the development of wealth is at its worst. In other words, it is a situation for the economy of a country when there is less trade and industrial activity than usual and prices of goods and other basic requirements of life for want adequate supply go up causing human hardship.

Economic mismanagement, decrease in foreign currency reserve, foreign debt default, rising inflation due to lack of supply from the global market, prolonged war, frequent political unrest etc. may cause economic crisis. In this context, I am going to discuss in particular the existing world economic crisis for which there are two fundamental reasons. The first one is the war between Russia and Ukraine, which began on 24 February 2022. The second one is the sanction imposed on Russia by the USA and the European Union. The object behind this is to create pressure on Russia to stop the war in Ukraine. But the sanction has negative impact on them as well as the entire world economy. Russia is the biggest supplier of gas, oil, food and fertilizer in the world. Next to Russia, Ukraine is a major supplier of food grain. The stoppage of supply of gas, oil, fertilizer and food from these two countries, adversely affected the international supply chain. The crisis in Ukraine and the sanction on Russia resulted in the rise of prices of all the above commodities in the world. We know that Europe cannot go even for a day without Russian oil and gas. Russia has reduced the supply of gas and oil to Europe. It has serious effect on the industries of these countries.

I would like to point out, as examples, the impact of the economic crisis of a few countries of Asia, Europe, East Africa and South America Based on report of the BBC and Aljazeera. In Sri Lanka the crisis has reached such a level that thousands of people have taken to the street in protest against the government for a long time for want of food, medicine, gas, fuel and other necessaries of life. There the rate of inflation is 55%. The ongoing crisis is the worst in the history of Sri Lanka.

The crisis is deepening in Pakistan which may be next to Sri Lanka. The country's economy is about to collapse due to shortage of fuel, electricity and gas. In South Korea the people have protested for better working condition, rise of salary and combating sparling inflation. The cost of living has become high in Tel Aviv due to Covid-19 and war in Ukraine. In South Africa there was mass protest against the rise of food price. The government cannot buy food for want of fund. The economy of Ukraine is ruined. Bangladesh is one of fastest growing economies in South East Asia. The war has affected its import of food grain from Ukraine. But the situation is very dire in East Africa where millions of people are facing food shortage. They are suffering from hunger and malnutrition.

Inflation is pervasive in Argentina. Every day the prices of food, fuel and diesel are increasing. There was demonstration in Argentina. The country's economy Minister has resigned for economic turmoil. Even New Zealand, UK, Germany, Ecuador, the US etc. are in the grip of inflation. In the UK inflation is more than 10% and the protesters demanded more cuts on the prices of food and fuel. In Germany inflation is more than 7%. There the union workers went on strike for higher salary to cope with rising prices. Commenting on the US economy the BBC reports that the overall price rise in the US is 10% and employment is far below the pre-pandemic period. The president is under pressure to bring prices down. He assured that the US economy would come out of recession very soon. The EU is facing severe economic crisis and is unable to give funds to Ukraine.

Thus, the Ukraine conflict is mainly responsible for the rise of prices of food, oil, gas, fertilizer and other necessaries of life in the world. As a result, general people with low income are hard-hit by soaring inflation. In this respect the grain deal signed between Russia and Ukraine would ensure food security in the world. So we hope and expect that the solution of the crisis in Ukraine, abolition of sanctions from Russia, resuming the supply of essential commodities from both the countries and providing bail out loans to the bankrupt countries by the IMF, the present world economic crisis can be solved.


The writer is an educationist and columnist.

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