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RECESSION- MEANING
A RECESSION is a decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year. A RECESSION is also preceded by several quarters of slowing down. RECESSION is the result of reduction in the demand of products in the global market.
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Business Cycle
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CAUSES OF RECESSION
Currency crisis Energy crisis War Under consumption Overproduction Financial crisis Price of Fuels
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EFFECTS OF RECESSION
Bankruptcies Credit crunches Deflation (or disinflation) Foreclosures Unemployment
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GLOBAL RECESSION
It is rightly said that, when US sneezes the world catches the cold Economists at the International Monetary Fund (IMF) state that a global recession would take a slowdown in global growth to three percent or less. The IMF estimates that global recessions seem to occur over a cycle lasting between 8 and 10 years.
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World Recession
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Time Taken
10 years
Stock markets crashed worldwide, and a banking collapse took place in the United states. This sparked a global downturn, including a second, more minor recession in the United states, the Recession of 1937.
1973-1975
2 years
A quadrupling of oil prices by OPEC coupled with high Government spending due to the Vietnam war lead to stagflation in the United States. The Indian Revolution sharply increased the price of oil around the world in 1979, causing the 1979 energy crisis.
1980-1982
2 Years
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1990-1991
1 year
2001-2003
2 years
The collapse of the dot-com bubble, the September 11 attacks and accounting.
2008-so on
continuing
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Recession in India
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TEXTILE
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Textile
'cottage industry' to the state of supremacy second largest employer in India, next to agriculture generates employment opportunities for approximately 33.17 million workers directly, and 54.85 million workers indirectly
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60% of the total garments manufactured in India are exported to foreign markets like EU, US, and Japan, generating revenue of upto US$ 52 billion Economic slowdown in the US and EU has affected the textile business in India, resulting in a drastic decline in the country's garment exports almost 8, 00,000 garment and textile employees had lost their jobs
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October 2008:Othe total output of the textile sector came down by 10% Punjab generating employment for 4,00,000 jobs has suffered a 50% loss in sales Majority of the layoffs target the daily-wagers
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Dr P R Roy, President, The Textile Association of India (TAI), while discussing the reasons for slump in Industrial production, told Fibre2fashion, Slowdown in global economy is definitely affecting our textile industry. But, there is a lot of pessimism in the market regarding global recession, which instigates negative thinking among people. So without plotting their own position, the manufacturers have started cost cutting. This can be one of the many reasons for plunging industrial production.
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BANKING
banks are like backbone for industries They provide loans and capital to the business, industry, agriculture etc. Loss of profit and Capital of these banks bring serious threat to the economic development of that country
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The present world recession has its roots in sub- prime crises The global banks and brokerages have had to write off estimated $ 512 billion in sub-prime losses
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the banking system in India had no direct exposure to the subprime assets that triggered the crisis in the advanced economies the Reserve Bank had taken a number of measures which contributed to strengthening the resilience in the Indian banking system
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Banks have suffered losses, including some public sector banks like Punjab National Bank, Bank of India, State Bank of India and Bank of Baroda as they had an exposure to the instruments issued by Lehman and Merrill Lynch.
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We take you through the BIGGEST falls in the Indian stock market history.
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January 21, 2008 January 22, 2008 February 11, 2008 March 3, 2008 March 17, 2008 10 October 2008 October 24, 2008
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AUTOMOBILE INDUSTRY
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Effect Of Recession
Uncertain exchange rate and a sudden increase in dollar value against Indian Rupee Delayed Payments from the OEMs (Original Equipment Manufacturer) Alloy and steel prices have also not shown any reduction in their prices
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Post Recession
The Indian automobile industry is expected to grow to US$ 40 billion by 2015 from the current level of US$ 7 billion in 2008. Challenge of Chinese Automobile Industry. Market Strength of Indian Automobile Industry.
New Innovation
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Real Estate
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Effect on Finance
DLF 79 % decline in profits & 57 % slide in sales Unitech 63 % decline in profits & 50 % slide in sales. Parsavanath, India bulls, HDIL, Akruti, Shobha, Purvankara have reported decline in profits upto 95 %. Overall 76 % dip in profits & 57 % fall in sales in First Quarter of FY 09-10 over First Quarter of FY 08-09.
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FUTURE PREDICTIONS
Close to $7 billion to $8 billion of venture capital expected to flow into Indian real estate market. A significant increase in project execution through Public- Private-Partnerships. More demand for office and industrial space.
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Hospitality Industry
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Facts and Figures The bottom line was severely hit by 65%.
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