Topic Of The Day:-“A Global Slowdown”
Policymakers Will Have To Bust Recessionary Fears With More Than Just Monetary Policy
Stock markets across the world had very little reason to celebrate in 2018. They witnessed the return of extreme volatility after many years, and most of them recorded their worst performance in a decade. Much of this gloom has to do with the rise in fears that global economic growth could come to a grinding halt in the near future. The economic expansion in the United States, which began after the 2008 recession, is now the second-longest in history. Many believe that a recession is overdue now. China is another major concern as the People’s Bank of China’s earlier moves to rein in a massive credit-fuelled bubble have been dampening momentum with a lagged effect. The country’s private manufacturing sector contracted in December for the first time in 19 months and the official manufacturing PMI (purchasing managers’ index) number dropped below 50 for the first time since mid-2016. Other major economies such as Europe and Japan have also shown signs of a potential slowdown in growth. Global stocks have been pricing in these very real risks, particularly with major central banks such as the U.S. Federal Reserve and the European Central Bank remaining on the path to normalise interest rates from near-historic lows. The steepfall in the price of oil is another indicator of faltering demand for commodities as the global economy cools down. The tightening of monetary policy has often been followed by a slowdown in economic growth, and this time may be no different.Going forward, a major worry for policymakers globally will be the lack of sufficient central bank firepower should the global economy move into a full-fledged recession in 2019. After years of adopting a monetary policy regime marked by near-zero interest rates, central banks like the Fed now have very little room to lower rates if they want to fight a recession. This is despite the gradual tightening of rates and unwinding of asset purchases in the last few years. The next recession may thus witness central banks adopting even more unconventional methods tostimulate their economies. Some hope that governments will ramp up spending tocompensate for the lack of monetary policy leeway. But it is unlikely that any fiscal stimulus will fully compensate for the absence of an accommodative monetary policy, particularly when most governments are already deeply mired in debt. Further, the overuse of monetary policy will eventually lead to diminishing returns. A further escalation in the trade war between the U.S. and China is another imminent risk to global growth as additional tariffs could increase the overall tax burden on the economy. In order to tackle the next recession, policymakers will have to come up with reforms to boost economic productivity, instead of just relying on an ultra-easy monetary policy to boost their economies.
MEANINGS AND WORDS
1) gloom
Meaning : partial or total darkness(n).
Synonyms : dismal
Antonyms : bright
Example : “he strained his eyes peering into the gloom”
2) recession
Meaning : a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.(n)
Synonyms : bankruptcy
Antonyms : increase
Example : “the country is in the depths of a recession”
3) concern
Meaning : relate to; be about(v).
Synonyms : burden
Antonyms : pastime
Example : “the story concerns a friend of mine”
4) rein
Meaning : check or guide (a horse) by pulling on its reins(v).
Synonyms : curb
Antonyms : release
Example : “he reined in his horse and waited”
5) dampening
Meaning : make less strong or intense(v).
Synonyms : humidify
Antonyms : collect
Example : “nothing could dampen her enthusiasm”
6) contracted
Meaning : decrease in size, number, or range(v).
Synonyms : consume
Antonyms : develop
Example : “glass contracts as it cools”
7) indicator
Meaning : thing that indicates the state or level of something(n).
Synonyms : index
Antonyms : mark
Example : “car ownership is frequently used as an indicator of affluence”
8) faltering
Meaning : lose strength or momentum.
Synonyms : hesitate
Antonyms : hold
Example : “the music faltered, stopped, and started up again”
9) steep
Meaning : (of a slope, flight of stairs, or angle) rising or falling sharply; almost perpendicular(adj).
Synonyms : abrupt
Antonyms : calm
Example : “she pushed the bike up the steep hill”
10) despite
Meaning : without being affected by; in spite of.
Synonyms : against
Antonyms : exalt
Example : “he remains a great leader despite age and infirmity”
11) stimulate
Meaning : raise levels of physiological or nervous activity in (the body or any biological system).
Synonyms : arouse
Antonyms : block
Example : “the women are given fertility drugs to stimulate their ovaries”
12) ramp
Meaning : a sloping surface joining two different levels, as at the entrance or between floors of a building(n) .
Synonyms : slope
Antonyms : level
Example : “a wheelchair ramp”
13) compensate
Meaning : give (someone) something, typically money, in recognition of loss, suffering, or injury incurred; recompense.
Tamil Meaning : ஈடு
Synonyms : atone
Antonyms : lose
Example : “payments were made to farmers to compensate them for cuts in subsidies”
14) mired
Meaning : cause to become stuck in mud.
Synonyms : enmesh
Antonyms : exclude
Example : “sometimes a heavy truck gets mired down“
15) diminishing
Meaning : make or become less(v).
Synonyms : curtail
Antonyms : develop
Example : “the new law is expected to diminish the government’s chances”
16) imminent
Meaning : about to happen(adj).
Synonyms : immediate
Antonyms : avoidable
Example : “they were in imminent danger of being swept away”
17) tackle
Meaning : the equipment required for a task or sport.
Synonyms : apparatus
Antonyms : avoid
Example : “fishing tackle”
18) relying
Meaning : depend on with full trust or confidence(v).
Synonyms : await
Antonyms : disregard
Example : “I know I can rely on your discretion”
