The economy has certainly been unstable in the wake of the COVID-19 pandemic, which was followed by a wave of global unrest, inflation, bank failures, and impeded trade. While experts continue to monitor whether economies are headed into an official recession, Vijay Eswaran recently took stock of the economic conditions facing ASEAN and other countries and noted that the global recession so many have feared is already on its way, if not already here. Signs of a U.S. market in contraction for consecutive quarters are daunting while the S&P 500 has fallen 25 percent since the start of 2023. Eswaran warns that while these are just the early indicators of economic troubles for the United States, these trends “are reverberating across every major economy.”
However, the biggest challenge facing global economies, Eswaran posited, is not the financial crisis that could come with a worldwide recession. Instead, the risk comes with leadership’s inability or unwillingness to acknowledge the likelihood of such an economic downturn and take steps to offset those effects before it is too late. Entrepreneur and philanthropist, Vijay Eswaran often takes a global view of regional situations and considers how they may impact not just ASEAN but the world. In the case of the pending, if not already occurring, recession, he noted that leaders need to be reminded that the effects of recessions are unequal among different countries. As such, the increase in cost of living is having a markedly different impact on citizens of developing countries while third-world debt threatens to further devalue their own currencies.
Eswaran cited Sri Lanka as an example of how poor financial planning and leadership exacerbated by the pandemic led to a national crisis on a social and political scale. “The country’s massive foreign debt, unsustainable trade gap, food and fuel shortages, and fiscal mismanagement culminated in civil chaos and the government’s total collapse earlier this year, leaving its future uncertain.” This trend is further evidenced through countries exhibiting warning signs throughout Africa and Asia as governments and economies struggle against the reality of inflation and rising interest rates.
What’s more, “many developed economies are not taking responsible steps to avoid a global recession,” explained Eswaran. Mr. Eswaran also expressed his concern that larger economies, such as the United States, are looking to find less productive ways out of debt, what he terms as printing its way out, a tactic he believes will ultimately fail. International relations through the larger nations on the world stage have also made it difficult for smaller economies to thrive. Considering the impact of the pandemic alongside disrupted trade between the United States and China and the conflict between Russia and the Ukraine, Eswaran warned that economic issues have been compounded for small and mid-sized enterprises (SMEs).
Vijay Eswaran’s concerns stem from a lack of preparedness that developing countries have with respect to a global recession. Rather than focusing on whether a recession will or is occurring, he argued that the right question to ask is “How will the global recession impact my organization, and how can we prepare for it?” To this end, no economy will be left unscathed when it comes to the effects of a recession, and businesses and governments alike need to prepare for the impact that a recession unlike any other could have on modern economies. One area that requires strengthening in emerging markets is the internet economy and e-commerce push, which Eswaran believes could help ease the damage done as businesses are able to carry on across regions and borders.
Reliance and incorporation of Gen-Z workers is part of the solution as well, according to Vijay Eswaran, who recognizes that this generation has already embraced digitalization and entrepreneurship in novel and critical ways. These approaches can help turn around stagnant businesses and revitalize them to be able to shift into international e-commerce and stem the tide of damage that could come with the recession. Eswaran also explains that these individuals are our future: “Making up more than a quarter of the world’s population, the 2.5 billion Gen Zers are dominating the market. Their wants and tastes will drive the new global economy,” he explained. The companies that embrace this evolution in the shadow of a global recession and economic disruption may just be able to find themselves in success once the tide shifts.