After months of speculation, economic recession in 2023 has started becoming a reality. Europe’s largest economy Germany has become the first victim of economic recession 2023. This has been confirmed by the official figures of the German government. Now the whole world is worried about who is going to be the next victim of recession. Meanwhile, some alarming figures are coming out from the world’s largest economy America.
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This is how Germany fell into recession
Speculations of economic recession are being made since last year itself. From the World Bank to the International Monetary Fund, they have repeatedly warned about the danger of recession, as well as on many occasions have told the recession to be inevitable. Germany’s statistics office proved them true last week, when data showed that Germany’s gross domestic product (GDP) declined by 0.3 percent during the March 2023 quarter. Earlier, during the last quarter of last year i.e. October to December 2022, Germany’s GDP declined by 0.5 percent.
What is economic recession?
According to the popular definition of economics, if an economy shrinks during two consecutive quarters, then it is said that the concerned economy has become a victim of economic recession. This means that the German economy is now officially in recession. It is a matter of relief that the rate of decline of Germany’s GDP has reduced on a quarter-by-quarter basis. This means that economic recession has come, but at present its intensity is not very high.
Can the richest country default?
Talking about the world’s largest economy America (US Economy), these days such a crisis has arisen in front of it, which was never seen till date. For the first time in history, America is on the verge of defaulting. America’s government treasury is almost completely empty. The government is no longer left with the option of raising loans. In January 2023 itself, the government had touched the maximum limit of $ 31.4 trillion of debt.
the american treasury is empty
After that, additional measures were taken to raise money. The Treasury took those measures using all the resources available to it. After that, the US government got so much money that it could work for a few months. Now this money is also going to end this week. As of May 23, the treasury had a cash balance of $76.5 billion. On the other hand, by June 1-2, a fairly large payment has to be made. In such a situation, the X-date i.e. the date when the coffers will be completely empty is not far away.
double whammy of inflation after debt
Inflation has rung another alarm bell in front of America. The US Department of Commerce released inflation data at the end of the week. According to official data, the Personal Consumption Expenditure Index increased to 4.4 per cent during the month of April. It was 4.2 per cent in March. In America, this index has the same importance as that of retail price index based inflation in India. In simple words, it means that this index decides the incidence of interest rates. Since the rate hike in April, there is a growing apprehension that the Federal Reserve may raise interest rates in June as well, which may further depress the already sluggish GDP growth rate. In this way, after Germany, America can also become an official victim of economic recession.
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