Three of top five global economies now in recession
Three of the world’s top five economies are now in recession, after Japan recorded a 7.8% decline in GDP, April to June.
Japan joined the USA and Germany in officially calling a recession, with India also poised to see a decline in GDP. However, in an Independence Day speech over the weekend, Prime Minister Narendra Modi outlined plans for vaccination rollouts and infrastructure investments – set to reach US$1.47 trillion across 7,000 projects – that could yet see things turn around.
Figures released today by Nasdaq showed India’s markets were performing well as a result of the renewed confidence.
In its most recent GDP figures, China posted growth of 3.2% for the second quarter, keeping the country out of recession. However, this followed a very different trend to what was seen in the first quarter when a contraction of 6.8% was recorded.
In Japan – home to NTT Docomo Inc and KDDI Corp, among others – the economy has been a delicate state since the 2008-09 recession, which greatly affected exports. The situation was addressed by Shinzo Abe when he was elected to power in 2012, which led to the term “Abenomics” being coined.
Expectations that he can repeat such success are now building.
Japan’s GDP reached US$5 trillion last year and was expected to grow 0.7% this year.
In the UK – which announced its recession last week – an additional 21% of IT and telecoms start-ups were plunged into “significant financial distress” in the second quarter due to Covid-19, with 34,000 SMEs in the sector directly impacted.
Earlier research published by Gartner also suggested that tech CEOs were “not prepared” for the Covid-19 recession.
However, that accounts for a mere 9% of the 520,000 SMEs currently considered to be “in distress” across all industries. The insight is according to data from the Business Distress Index, published by RealBusinessRescue.co.uk, which assessed data from 3.7 million businesses.
And last week, writing for Capacity Mo Firouzabadian, SVP for developed markets at Evolving Systems, said: “No business is recession-proof, but the communications infrastructure in the modern world is as close as it gets; the grid via which virtually all modern commerce flows, is managed, increasingly is monetised, and via which customers are gained and retained.
“It’s reasonable to predict many companies, in the wake of behavioural and operational changes in working practices driven by Covid-19, will downscale their real estate assets and adopt new commercial strategies. None are likely to seriously downscale their investment in communications networks.”