Economical Entropy :- Concerns Find New Dimension

Not just the global order of geopolitics in phase of transition and conflict of interest or self-interest consuming the diplomacy but the new disorder has magnetic charm these days belongs to economics distress. Since the currency and market became the deciding factor in humans life , it's been quite hard to ignore what could be worst for a nation than loosing the enclaves or exclaves but hard to digest worst been the financial scam or crisis, which drags the gigantic economies into the gorge to centuries back.

                    (Image courtesy :- Financial Times)

Globalization made everything inter-connected , so economies are too. Since this February, invasion of Russia into the Ukraine for territorial gain, fueled the already worsened the situation by the pandemic. During pandemic where West Texas Intermediaries and Gulf crude oil's per barrel price went down to less than $10 , now as Russia as the largest exporter of cooking gas and petrol , shooting the price to $100/barrel, which not only hampered the European dependency on the Nord Stream but made quite unaffordable for them, and America's sanction on Russia made it more bizzare but also ensure that Europe has no option to buy the US's shell gas and oil in lage quantity. European nations who are in crunch of financial deficit and depreciating Euro against the dollar,came down to 20 years low, making so tough to sustain. This put the pressure on the reserve storage of the petroleum but that won't be good for months.

Rising inflation hampered the developed countries like United Kingdom who stands at rate of inflation at 10% and rising due to instability in the government and facing since the Brexit and new super rich tax of 45% curtailed down by the newly elected UK's PM Liz Truss and Chancellor, which proved to be a backlash, as citizens are calling to bring back Rishi Sunak. Turkey's fate didn't change even renaming the country's name to Turkiye, where inflation rises to 80% and Lira depreciating like the detoriating health of a super senior citizen, as Receip Erdogan ran out of any plan to revive except beating drum of Kashmir at UN and threatening like a child to veto the inclusion of Sweden and Finland into the NATO, unemployment raising in the proportion of inflation. Even the Communist China's economy failing to survive as it seems their economy was nothing but just a bubble and only dependent on the real estate sector. Thousands of banker and customers protesting against the govt, when China raised the interest rate to fill the deficit made by the Evergrande, which caught in the trap of $3 billion unpayable loan and now companies are started to shift out of China, in recent more than 1400 companies shifted out of China and they choose the destination like Vietnam, Malaysia and very few of them choose India too. China's economy seems now stagnant around 3% which's their lowest GDP growth rate in last 30 years , where once growing at the rate of 15%. Sanctioned Venezuela seen the hyper inflation of around 100000% and reprinting to finance the deficit made the situation more worsed. Having largest reserve of crude oil, Venezuela failed to export due to sanction and not authorised government of Nicolas Maduro. Japanese Yen trembling around ¥145 in compare of one dollar , which all time low for the Japan Central bank, plus Japanese aging population also hampering their manufacturing sectors, so they are easing work visa norms to attract foreign skilled workers but with this population growing at fast pace and Japan has not such resource to keep the pace with it.

            (Image courtesy :- Statista and sourced by IMF)

US's economy felt the tremour to and in shambles , since Biden adminstration ran out of any idea and failed to cop-up with pandemic and uselss decision like continues funding millions to Ukraine, raised the current account deficit and forced Federal reserve to raise the Fed rate bit by bit. Raise in fed rate hampers the global stock market, whenever Federal bank raises the rate , market like of India sees the flung of FPI's and sudden fall in the Sensex and rise in the Daw Jones. India's inflation and unemployment crisis grew simultaneously. Where unemployment rate hoovered around 9.1% and CPI gone to 11% and WPI to 15%. This had been happening due to Accommodative stance almost throughout the pandemic, where RBI kept on curtailing the repo rate and stabilised it at 4% for nearly 10 months. Basically to lure more investment and to keep the demand and supply in trend, which went down during lockdown at GDP measured the GDP at -7.5%. Almost 10% of total GDP announced for economic relief package to reboot the economy. But as soon things came to normal , money in circulation and currency in people's hand started hampering the inflation and investment driven the share market like never seen bull run and inflation rate which had been fixed to be between 4% (+2, -2%), breached. Onto that fuel prices made RBI more worried, whose forex reserve at one time at $625 billion dollars, came down to $545 billion , where India was importing inflation and on one side rupee was trembling, so to maintain the rupee RBI had to sell the dollar in shot market. Although India's condition gone up so rapidly from deep under the surface. In between Sri Lankan financial crisis in need of package , so India came to relief and provided $2 billion as food, fuel and medicine. India's GDP grew around 13.2% which is still less than the previous quarter of June of 16%, yet according to IMF, World Bank, India continues to be the fastest growing economy and only hope for the investment geeks.

What Could be the way forward?

--> First thing first, these war and pandemic made us realize that we need to strengthen our supply-chain resilient, so there must be global interconnected network may not get hampered.

--> Organization like UN and their food programme must ensure in the period of crisis , there shouldn't be any obstacle in supply of food ,where most of the least developing or developing nations feel the burnt of it, like African country Madagascar dependent on Ukranian wheat for almost 60% of their need.

--> On taking responsibility, major trade routes shouldn't get captured to trigger the energy ,food supply more worst. Like Black sea, Indo-Pacific, North Atlantic sea trade route.

--> Central government must think before quantitative easing and shouldn't pursue it in condition of hightening inflation, which we've seen quite catastrophic in case of India, whose per capita income at just $2000.

--> Countries like America who announced Unemployment package of $1000 went wrong and this went for mass resignation around US and burden faced by the public accounts. 

--> Focus must be on regional groupings, not only to contain any anonymity but to boost trade , cooperation in infrastructure. Like ASEAN and RCEP came a long way in positive direction. But organisation like SAARC and BRICS and QUAD proved northing but to contain anonymity. 

--> One the most important step must be to find alternate of trades in Dollar. This must be done between two nations in their own Currencies and need to focus on Nostro and Vostro account or something like SDR of IMF.

--> There must be currency swap agreements between two nations, like India did with Japan of around $75 billion.

--> Shift must be on renewable sources of energies , so in situation like war burnt of the war can be curtail down to lessen.

--> To achieve Sustainable Development Goals , we need to work upon all these areas to be more resilient.