Recession on it sector

RECESSIONin

IT SECTOR

Road map• What is recession?• Causes of recession• Impact of recession• How to come out of recession.

WHAT IS RECESSION?

In economics, the term recession describes the reduction of a country's gross domestic product (GDP) for at least two quarters.

The usual dictionary definition is "a period of reduced economic activity"

• In macroeconomics, a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year

Causes of recessions

• Currency crises• Energy crisis• Under-consumption• Overproduction• Financial crisis

Currency crises

A currency crisis, which is also called a balance-of-payments crisis, occurs when the value of a currency changes quickly, undermining its ability to serve as a medium of exchange or a store of value. It is a type of financial crisis and is often associated with a real economic crisis

Energy crisis

An energy crisis is any great bottleneck (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources. An energy crisis may be referred to as an oil crisis, petroleum crisis, energy shortage, electricity shortage or electricity crisis

UnderconsumptionIn underconsumption , recessions

and stagnation arise due to inadequate consumer demand relative to the amount produced

Overproduction

In economics, overproduction refers to excess of supply over demand of products being offered to the market. This leads to lower prices and / or unsold goods

Financial crisis

The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value

How to know recession?

Indicators to say a nation is in recession;

• - People buying less stuff - Decrease in factory production • - Growing unemployment • - An unhealthy stock market

IMPACT OF RECESSION ON IT SECTOR

The impact of Recession is unpredictable. The main effect of recession is in IT sector and is mainly related to the job loss and unemployment

How to come out of recession?

It is unhealthy for any nation to be in Recession;So, Government will take certain countermeasures to eliminate or reduce the Effect of recession for turnaround;

Important Point: Today, it is a market Economy

Producers;Can produce and

sell at their prices

Consumers;Can decide to

buy or not;

But, Government does not have direct control on Producers’ & the Consumers’ behavior; But, they can influence millions of Producers & Consumers with Government’s policies;

Government has 2 plans

Fiscal Policies

(By Govt.)

Monetary Policies(By RBI)

Government influences the economy by changing howit (Government) spends and collects money

RBI manipulates the available supply of money in the country

Fiscal Policies

Government influences the economy by changing how it (Government) spends and collects money

1] Tax cuts for businesses or for individuals

2] More Spending by Govt. to create jobs

3] Automatic fiscal policy; Unemployment Insurance

More moneyavailable forspending

Individuals getsalary and spendmoney

Some income tounemployed people to spend

Demand picksup; Market can recover;

MonetaryPolicies

Government manipulates the available supply of money in the country

1] Reduce reserve ratio

2] Lower the interest rates

3] Use its own reserved money to buy Govt. bonds

More moneyavailable for bankto give loans

Individuals takemore loan

It becomes anincome to Govt.to inject moneyinto the market

Demand picksup; Market can recover;

BIBLIOGRAPHY• www.wikipedia.com• www.authorstream.com• www.slideshare.com

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