Dubai – ‘The international community has not taken corrective measures for the various problems which arose in the world economy. It would, therefore, invite a new global recession’, Nobel Laureate, economist Paul Krugman warned. At the same time, Krugman claimed that the European Union (EU) seems to be the most vulnerable for an economic slowdown in the current scenario. In the last few months, along with leading financial institutions such as the World Bank and the International Monetary Fund (IMF), many organisations have indicated the onset of a recession and Krugman’s warning only corroborates it.
Krugman issued a severe warning on the world economy at the ‘World Government Summit’ held in Dubai. ‘There may not be just ‘one big thing’ prompting an economic slowdown but a range of economic headwinds leading to a likely slowdown. Also, President Trump’s decision to cut taxes was “not very effective”,’ he underscored.
At the same time, economist Krugman warned that inaction at appropriate times against the economic crisis would be the primary factor responsible for the recession. He also expressed displeasure on the consistent increase in the interest rates of banks to be a terrible practice. Nevertheless, the economist added that the impending recession might not be as big as the one in the year 2008. Even so, he voiced concerns over the US economy being hit with significant shocks while the economic policymakers may not be prepared enough to deliver an effective response when it occurs.
Before Krugman, US economist Peter Schiff as also former British Prime Minister Gordon Brown had issued severe warnings on economic slowdown. Last year, Former British Prime Minister Gordon Brown had said, ‘The risk of another recession akin to the one the world witnessed a decade ago, has increased and the world is sleepwalking into a financial crisis’.
Whereas, economist and investor Peter Schiff had stated that as the world had not taken a lesson from the severe economic downturn in 2008, the next brutal crisis hitting the world was almost inevitable and due to the failure of the US dollar, it would be ‘of an order of magnitude larger than 2008’.