Saturday, March 14, 2009

Stumble or Tumble?

(1)The world has more bourgeois today than 20 years ago due to the rise of the new emerging markets in the world. The rise of the bourgeois or middle class has changed the world and its economy.

(2)Who are the bourgeois? Bourgeois are neither the rich nor the poor; neither do they have enough money to escape the struggles for existence nor living from hand to mouth. Bourgeois vary hugely in terms of their background, education, profession and income. If you have around one third additional income left from discretionary expenditure after taking away basic necessity expenses, you are considered a bourgeois.

(3)Before recession, bourgeois are happy people. They are keen to invest in new products and new technologies, invest in human capital and educations, invest in new homes and shares, invest in commodity goods and busy with their exports and trading businesses around the globe. Bourgeois have flourished in places and nations that have opened up to the global economy such as the eastern seaboard of China, metropolitan Brazil, and southern India.

(4)From East Asia to Southern Asia, from East Europe to Southern America, from Southeast Asia to West Asia to Africa, from West Europe to North America, Bourgeois are one of the major expenditure contributors to the global economy.

(5)As new emerging markets offer cheaper labor cost, cheaper manufacturing cost, cheaper raw materials and cheaper commodities whilst rich nations are busy generating more and more sophisticated finance, these new emerging markets thus surged where the boom is powered by the rich world demand.

(6) Global recession hits the developing world especially the new-emerging markets the most as these markets depend on trade for economic growth. The World Bank expects the world economy to continue shrinking to its fullest this year for the first time since the 1929 Global Recession. The shrunk economy will consequently shape the buying power which the world trade is expected to fall at the fastest rate. In its latest release on March 11, China declares the country’s exports falling 26% compared to a year ago. China, one of the ‘Super-Star’ for the new-emerging markets has been hit the hardest, despite a $586 Billion stimulus package. All the famous four new-emerging markets, namely China, India, Brazil and Russia now share the same grief too.

(7)Will this worsen the recession? Will the global recession halt the rise of new-emerging markets? The answer to both questions is yes, it will.

(8) From subprime crisis to global financial crisis, the world economy has been destroyed. The US subprime bubble has caused the world to sink into recession. Most of the new-emerging markets have been badly hurt by the global financial crisis as the boom of these countries was driven largely by exports to rich nations like the US. Today, we have witnessed not only a harsh economic slowdown, but also more unemployment across the world, more supply than demand, lesser expenditure, and more social unrest.

(9)210million people are estimated to be unemployed by end of this year according to estimation by International Labor Organization (ILO) and Organisation for Economic Co-operation & Development (OECD). ILO estimates at least an additional 7.2million Asians will become jobless in 2009, an increase of 0.3% from 2008. ILO also forecasts at least 97million or in the worst scenario, 113million Asians will become jobless this year.

(10)Bear in mind as well that the grim news to job losses also signifies: job-lost, wage-freezes, job-sharing, and enforced holiday periods.

(11)And with all these happenings, these new-emerging markets and their people – the bourgeois, are now under a greater threat. They invested heavily when they started their import-export businesses. They invested in properties before the subprime bubble deflated. They created more job opportunities to the nation, and they spent modestly on their annual holidays. However, the global financial crisis has now led the exports of new economies to developed nations to either decline or come to a grinding halt. Unemployment rate now surges drastically. Wealth has been diminished by falling assets prices, and is further hurt by the credit crunch. The emerging economies are seriously at risk now. And Dubai, being one of the new-emerging nations from the Middle-East, is already in trouble!

(12)The new-emerging markets need time to recover from the global recession. These new-emerging economies need to create internal demand within its nations. There are more than 2billion bourgeois in the world who need to find ways to get themselves out of the recession. If they fail to do so, they will sink back into poverty. A lot more negative impacts can be anticipated, and which further elaboration will result in a separate lengthy article all together. In short, the recession this time around is extremely volatile. It can turn out to be a small “stumble” for the bourgeois, or it could caused them tumbling down completely if the right measures are not taken or not taken fast enough.

(Article also available in Hewo.com BloggerStation.)

No comments:

Post a Comment