The Next Recession

A leading economist from the Sydney Morning Herald reports that the World Bank has released a warning that theories over a new financial crisis might prove correct.

Chris Richardson, Deloitte Access Economics director, urges that if Europe and America did not turn their economic situations around, Australians can expect an unpleasant and ‘bumpy’ future ahead of them. If things are left as they are and the 2008 - 2009 financial crisis was left to repeat itself? there will be higher rates of unemployment (as nations have barely recovered from the last recession before they are sent into another one), sharp hit to company profits and, as a result, will slowdown the Australian economy.

The World Bank is heavily concerned over the European crisis in particular. If world leaders refuse to roll over European dept, it is predicted that financial markets could stop working. The world economy is delicate and works like an intricate arrangement of gears, if one gear breaks (in this case Europe) all the other gears cease to turn. And as would be expected, if financial markets become static, the whole world’s economy would be hit - Australia is no exception.

Lead economist from the World Bank, Andrew Burns, released a report stating “A much wider financial crisis that could engulf private banks and other financial institutions on both sides of the Atlantic cannot be ruled out.”

Burns ensures that if this was to happen, the global financial downturn is likely to be deeper and more long-term that our previous recession.

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