The whole world is facing economic crisis. The US economy is not in shape. European Union may fall and Euro may cease to exist if the crisis in EU extends for some more time. The emerging economies like China and India are slowing down. The Africa is facing social unrest. Russia is also witnessing some domestic problems relating to elections. Other emerging economies like Brazil, South Africa and Indonesia etc. have also been showing signs of weakness in the economic growth. Overall conditions of the whole world are worrisome making people worried.
"No doubt it is tough time and everyone is worried. So everyone is trying his best to ensure that his interest remains safe from individuals to companies to economies. To achieve this most sought after so called the sacred goal people are doing anything ignoring some basic rules. And their ignorance about the results of their actions, they instead are making things worse and forcing the world economy to suffer more."
All the countries are taking some steps to safeguard their domestic economies. And to achieve the goals they are coming up with rules, laws and regulations that can hurt their business partner countries. Everywhere in the world the protectionism is on rise. Countries like the USA and Britain that were champion of free market economy are now talking about protectionism and safeguarding their domestic businesses. The US President wants to ensure that outsourcing of jobs is reversed and no job goes to other countries so that problems of unemployment can be solved. But he is not thinking about the impact of this protectionism. This will hit emerging countries like India, China, Philippines, Indonesia and Brazil etc. that have half of consumers of the whole world and also have purchasing powers. But the consumers in these countries will hit most by such moves of banning outsourcing by the USA or other developed countries. And eventually the consumers in these economies will stop spending and the businesses in these developed countries will hit most as in these countries export has very huge portion in their consumption.
On the same line Indian government could not allow foreign direct investment in retail sector as there was cry by the opposition parties. This has hit the Indian economy more than any one else. Indian retail sector needs money and expertise both that can be availed by opening up the economy. The aviation sector too needs money to avoid any future problems like Kingfisher.
Like the economies and countries, companies too are taking steps to ensure that they don’t face problems. For this purpose they are firing their people for purpose of cutting the cost and increasing competitive advantages. Because of lackluster demands and uncertain future, companies are either postponing their investment plans or cancelling at all. These actions of companies are leading to more problems.
"The firing is leading to increased unemployment in economies and postponement and cancellation of investment is also helping in increasing unemployment rates in economies. The increasing the unemployment is leading to falling expenditure by consumers seeing uncertain future. And this is eventually leading to low demands in the economies. So finally it is hurting the businesses too. So this strategy of cutting cost is not a right strategy."
So I think that the rising protectionism in developed as well as emerging world and firing by corporations to cut the cost is not right strategy. This strategy instead is making the conditions even more problematic.
"In this integrated world where everyone now gets affected by any happening in any corner of the world, it is better to hold hand and walk together than making others suffer to remain afloat or revive economies or businesses to finally die."