BUSINESS & ECONOMY

The Upcoming Recession and its Ramifications on World Economies

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2 years ago

November 28, 2022

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By Rahul Ajnoti

The recent decision of the new head of Twitter, Elon Musk, to sack approximately 50 percent of the workforce is only indicative of the recession that is glooming over the world. The story of Twitter is just one example among many visible ones. Almost all the major firms around the globe have or are planning to lay off employees, including Microsoft, Meta, Tencent, Xiaomi, Unacademy, etc.

According to a comprehensive study titled ‘Risk of Global Recession in 2023 Rises Amid Simultaneous Rate Hikes’ by the World Bank, all the nation-states are tilting towards a cascade of economic crises in global financial markets and emerging economies, leading to long-term damages. The report blames central banks around the globe for raising interest rates to tackle inflation caused due to the Coronavirus pandemic and Russia’s aggression on Ukraine in the European arena. The report states that even raising the interest rates to an unprecedented high not seen over the past five decades will be insufficient to pull global inflation down to the pre-pandemic levels. It further instils the need to focus on supply disruptions and subside labour-market pressures. The President of the World Bank Group, David Malpass urged policymakers to focus on boosting production instead of cutting consumption and make policies that generate auxiliary investments, improving productivity and capital allocation, which are crucial for growth.

Economics 101: Recession

Amidst the pandemic, many states released relief and stimulus packages that heavily leaned on measures to expand liquidity, such as loosening lending restrictions or reducing repo rates (the rate at which commercial banks borrow money from the central bank) as well as reverse repo rates (the rate at which commercial banks lend money to the central bank). China was the first state to act upon these stimulus measures to counteract the disruptions caused by the covid, followed by Japan, the EU, Germany, India and so on. Though the measures helped economies absorb the pandemic’s impact, one major drawback was increased demand due to induced money flow in the market, leading to inflation.

Inflation, defined as the rate of increase in prices of general goods and commodities in a given period of time, can be caused by multiple factors. A shortfall in aggregate supply, one of the most common factors, can lead to excessive demand pressures in the market. To curb inflation, central banks often tweak or change the fiscal and monetary policies of the nation. Increasing the interest rates is one such measure, as it tightens the economy’s banking system and thus contracts the flow of money, reducing already high demands. However, suppose only the rates are increased without substantial reforms in line with resetting the supply chains, increasing production and overall growth to meet the demand; in that case, a country may move towards a recessionary period. Therefore, alongside rising rates, a nation must diversify its suppliers, invest in technology (without increasing the debt burden), and focus on self-reliance while sustaining employment.

The International Monetary Fund (IMF) defines recession practically as the fall in a country’s Gross Domestic Product (GDP), i.e. a decline in the value of all the produced goods and services in a country for two consecutive quarters. Simply, a recession is a period of massive economic slowdown. Pointing at a specific moment when a recession occurs is almost impossible and futile. However, a few indicators, like the downfall of GDP and public spending, increased unemployment, and a decline in sales and a country’s output, generally point towards an upcoming recession. To sum up, there are various ways for a recession to start, from sudden shocks to the economy and excessive debt to uncontrolled inflation (or deflation) and non-performing asset bubbles.

The Stumbling Economies

According to IMF Managing Director Kristalina Georgieva, “First, Covid, then Russia’s invasion of Ukraine and climate disasters on all continents have inflicted immeasurable harm on people’s lives.” One-third of the world economies, including the United States, Europe and China, are expected to contract in the subsequent quarters.

For US economists and forecasters, the recession is no longer about ‘if’ but ‘when’. The decision of the Fed (US Central Bank) to increase rates to cool inflation without inducing higher unemployment and an economic downturn has only shrunk the possibility of a ‘soft landing,’ which occurs when the tightened monetary policies of the Fed reduce inflation without causing a recession. Nouriel Roubini, one of the few economists who rightly predicted the financial crisis of 2008, also claims a prolonged and inevitable recession in 2022 that will last till 2023. Economists expect a growth rate of 0.4 percent in the fourth quarter of 2023 as opposed to the fourth quarter of the previous year, and in 2024, they expect the economy to grow at 1.8 percent. The rate of unemployment is expected to rise to 3.7 percent in December this year and to 4.3 percent in June 2023, compared to 3.5 percent in September.

Like the US, Europe was also under the impression that the economic situation would improve without a recession. Assumptions of subsiding or transitory inflation due to solid businesses, enough public savings and adequate fiscal adjustments turned out wrong for the European economies. The Euro area (5.1 percent), and the UK (6.8 percent), are among the countries with the most expected output loss. Europe has mainly been affected by the Russian war on Ukraine and the resulting oil and gas disruptions leading to an ‘Energy War’ against the former. Similarly, China doesn’t lie far from them, with an expected output loss of 5.7 percent in 2023. Zero Covid Policy, coupled with the mortgage crisis and exodus in the manufacturing sector, has led to the economic slowdown of the Asian giant.

Impact on the Indian Economy

India reported a growth of 13.5 percent in the April to June quarter and became the world’s fifth-biggest economy, taking the spot of Great Britain. However, this growth results from the nation’s shutdown amid Delta-driven covid lockdowns during previous quarters and not because of the significant improvements in the economic activities. India needs to focus on skill-based human development projects to unleash its economic potential and effectively utilise its demographic dividend. However, India is not immune to the global slowdown. It is expected to face an output loss of 7.8 percent in 2023.

Indian CEOs are also expecting a decline in the growth of companies, but the economy is expected to bounce back in the short term, according to KPMG 2022 report. Moreover, 86 percent of CEOs in India expect an impact of up to 10 percent on earnings in the next 12 months. Reducing profit margins, boosting productivity, diversifying supply chains, and implementing a hiring freeze (worst case, layoff policies) are a few steps firms can take to weather such challenges.

India, thus, needs to tap the potential of start-ups and small enterprises, as opposed to just established firms, by expanding and enhancing the private sector’s access to capital investments and curbing environment-related risks. Reforms in dispute resolution mechanisms are also long overdue, evident through the Ease of Doing Business report, where India ranked 63rd out of 190 countries worldwide. India needs to prove its worth by showing investors that not only can their money achieve decent returns, but it is safe in Indian soil as well.

The stand on India’s future remains split. The global rating agency S&P claims that India will not face the true and horrifying brunt of the global recession thanks to its decoupled economy with huge domestic demand, healthy balance sheets and enough foreign exchange reserves. On the contrary, according to the Japanese brokerage firm- Nomura, policymakers are misplaced in their optimism about India’s growth trajectory. Its economists assert India’s estimated growth at 7 percent in FY23, which is at par with the RBI’s revised forecasts, but it also predicts a sharp decline to 5.2 percent in FY24. This estimated growth doesn’t align with India’s commitment to becoming a 5 Trillion USD economy.

Way Forward

UNCLAD’s Trade and Development Report 2022 projects global economic growth will plunge down to 2.5 percent in 2022, followed by a drop to 2.2 percent in 2023, costing the world a loss of more than 17 trillion USD in productivity. It further warns that the developing nations will be most vulnerable to the slowdown resulting in a cascade of health, debt and climate crises. Regarding the proportion of revenue to public debt, Somalia, Sri Lanka, Angola, Gabon, and Laos are the worst-hit countries, evident through the excessive inflation these states face.

Similarly, Indian fuel and food commodities prices have increased, but India’s sturdy performance when other countries are struggling can be attributed to its efficient policies. India does not have a perpetual external debt burden to hamper its growth. In addition, the government has focussed on developing the industrial and service sector to promote jobs and increase savings, especially after the Pandemic, to revitalise the Indian economy. Domestically, the government has provided effective social safety nets to ensure healthy livelihood for the population.

Despite these factors, India must realize and accept the harsh reality of the upcoming turbulent times. India may have a decoupled economy, but the world is one interlinked system. Global slowdowns will lead to a recession in India as well, whose effects are becoming more and more visible with each passing day. Major tech firms in India like Wipro, Tech Mahindra and Infosys have revoked their offer letters to young freshers, while others have started laying off employees amidst the fear of global recession. Irrespective of whether India becomes the “fastest growing economy” in the end, even a modest growth rate of about 5 percent will push millions into poverty in a country like India. It’s only imperative to realise that a depreciating currency and elevated inflation will hit the poorest the hardest, and India must be prepared to deal with this challenge.

Courtesy: Modern Diplomacy

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BUSINESS & ECONOMY

What is the Role of Bosnia in Strengthening Halal Supply Chains in Europe?

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5 days ago

March 20, 2025

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Hafiz M. Ahmed

Imagine walking into a supermarket in Paris, Berlin, or London, scanning the shelves for halal-certified products. You pick up a pack of chicken, a bottle of olive oil, and a box of cookies, all bearing the halal logo. But have you ever wondered how these products made it to the shelf? Behind every halal-certified item lies a complex supply chain that ensures its authenticity, safety, and compliance with Islamic principles. In Europe, where the demand for halal products is growing rapidly, building a reliable and transparent halal supply chain is no small feat. Enter Bosnia and Herzegovina, a country that has emerged as a key player in strengthening halal supply chains across the continent.

With its deep-rooted Islamic heritage, cutting-edge certification processes, and collaborative approach, Bosnia is setting a new standard for halal integrity in Europe. This article explores Bosnia’s pivotal role in creating a robust halal supply chain, its collaborations with other halal-certified organizations, and why its efforts matter for businesses and consumers alike.

The Growing Demand for Halal Products in Europe

Europe is home to over 25 million Muslims, a number that is expected to grow in the coming years. This demographic shift has fueled a surge in demand for halal products, from food and beverages to cosmetics and pharmaceuticals. According to a report by Statista, the European halal food market alone is projected to reach $30 billion by 2025. However, meeting this demand is not without its challenges.

One of the biggest hurdles is ensuring the integrity of the halal supply chain. From farm to fork, every step of the process must adhere to strict halal standards. This includes sourcing halal-certified raw materials, using compliant processing methods, and maintaining transparency throughout the supply chain. For businesses, this requires a high level of coordination and expertise—something that Bosnia has mastered.

Bosnia’s Expertise in Halal Certification: A Foundation for Trust

Bosnia and Herzegovina has long been a leader in the global halal industry, thanks in large part to its Agency for Halal Quality Certification (AHQC). Established in 2007, the AHQC is renowned for its rigorous standards and transparent processes. But Bosnia’s contribution to the halal industry goes beyond certification; it plays a critical role in strengthening halal supply chains across Europe.

Here’s how Bosnia is making a difference:

Setting Rigorous Standards: The AHQC’s certification process is one of the most stringent in the world. It covers every stage of production, from sourcing raw materials to packaging and distribution. This ensures that products bearing the Bosnia Halal Certification logo meet the highest standards of quality and compliance.
Promoting Transparency: Transparency is at the heart of Bosnia’s approach to halal certification. The AHQC requires detailed documentation and conducts regular audits to ensure ongoing compliance. This level of transparency builds trust among consumers and businesses alike.
Leveraging Technology: Bosnia is at the forefront of using technology to enhance halal supply chains. From blockchain to track and trace systems, the country is leveraging innovative solutions to ensure the integrity of halal products.

Collaborations: The Key to a Stronger Halal Supply Chain

Bosnia’s success in strengthening halal supply chains is not a solo effort. It is the result of strategic collaborations with other halal-certified organizations, businesses, and government bodies across Europe. These partnerships have been instrumental in creating a more reliable and transparent halal ecosystem.

Partnerships with Halal-Certified Businesses: Bosnia works closely with businesses that are committed to halal integrity. By providing them with certification and guidance, the AHQC helps these companies navigate the complexities of the halal supply chain.
Collaborations with International Halal Organizations: Bosnia is an active member of global halal organizations such as the AHAC – Association of halal Crttifiers. These collaborations ensure that Bosnia’s standards align with international best practices.
Government Support: The Bosnian government has been a strong advocate for the halal industry, providing funding and support for initiatives that promote halal integrity. This has enabled the AHQC to expand its reach and impact.
Educational Initiatives: Bosnia is also investing in education and training to raise awareness about halal standards. Through workshops, seminars, and publications, the AHQC is helping to build a more informed and skilled workforce.

Bosnia’s Impact on the European Halal Market

To understand the real-world impact of Bosnia’s efforts, let’s look at a case study. In 2020, a major European supermarket chain partnered with the AHQC to source halal-certified poultry products. The collaboration involved:

Sourcing: The AHQC worked with farmers and suppliers to ensure that the poultry was raised and processed in accordance with halal standards.
Certification: The AHQC certified the entire supply chain, from the farm to the supermarket shelf.
Transparency: The supermarket chain used blockchain technology to provide consumers with real-time information about the product’s journey.

The result? A 20% increase in sales of halal-certified poultry products within six months. This success story highlights the tangible benefits of Bosnia’s approach to halal supply chain management.

Why Bosnia’s Role Matters for Europe

Bosnia’s contributions to the halal industry have far-reaching implications for Europe. Here’s why:

Consumer Confidence: By ensuring the integrity of halal supply chains, Bosnia is helping to build consumer confidence in halal-certified products. This is crucial in a market where trust is paramount.
Economic Growth: The halal industry is a significant driver of economic growth. By strengthening halal supply chains, Bosnia is creating new opportunities for businesses and boosting the European economy.
Cultural Integration: The halal industry plays a vital role in promoting cultural integration. By providing high-quality halal products, Bosnia is helping to meet the needs of Europe’s diverse population.
Global Leadership: Bosnia’s expertise in halal certification and supply chain management positions it as a global leader in the industry. This not only enhances its reputation but also sets a benchmark for other countries to follow.

Challenges and the Way Forward

While Bosnia has made significant strides in strengthening halal supply chains, challenges remain. These include:

Standardization: Despite Bosnia’s efforts, there is still a lack of uniformity in halal standards across Europe. This can create confusion for businesses and consumers.
Fraud and Mislabeling: The rise of counterfeit halal products is a growing concern. Bosnia is addressing this issue through stricter regulations and advanced tracking technologies.
Awareness: Many consumers and businesses are still unaware of the importance of halal certification. Bosnia is tackling this through educational initiatives and outreach programs.

Looking ahead, Bosnia’s focus will be on fostering greater collaboration, leveraging technology, and raising awareness about halal standards. By doing so, it aims to create a more robust and transparent halal supply chain that benefits everyone.

Bosnia and Herzegovina has emerged as a beacon of reliability and transparency in the European halal industry. Through its rigorous standards, innovative solutions, and collaborative approach, the country is playing a pivotal role in strengthening halal supply chains across the continent. For businesses, this means access to a growing market and a trusted partner in halal certification. For consumers, it means peace of mind knowing that the products they purchase meet the highest standards of quality and authenticity.

As the demand for halal products continues to rise, Bosnia’s contributions will become even more significant. By setting a benchmark for integrity and excellence, Bosnia is not only shaping the future of the halal industry in Europe but also inspiring the world to follow suit.

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BUSINESS & ECONOMY

Yousef Khalawi Outlines Strategies to Shape the Future of the Global Halal Economy at MFH 25

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3 weeks ago

March 4, 2025

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Hafiz M. Ahmed

In a talk at the Makkah Halal Forum 2025 , H.E. Mr. Yousef Khalawi , Secretary General of the Islamic Chamber of Commerce and Development (ICCD), shared his vision for shaping the future of the global halal economy. The session, titled “Strategies Shaping the Future of Halal,” was moderated by Dr. Wael Eldesouki Bedda , Secretary General of the Saleh Kamel Sustainable Entrepreneurship & Enterprise Development Organization (SKSEED), and provided attendees with a roadmap for driving innovation, sustainability, and inclusivity in the rapidly growing halal sector.

During the 20-minute interview, Mr. Khalawi emphasized the transformative potential of the halal industry,He outlined key strategies to position the halal economy as a force for ethical trade, environmental stewardship, and cross-border collaboration.

“The halal economy is not just about compliance—it’s about creating value that benefits humanity and the planet,” Mr. Khalawi stated. He highlighted the importance of aligning halal practices with the United Nations Sustainable Development Goals (SDGs), ensuring that growth in the sector contributes to poverty alleviation, gender equality, and climate action.

One of the central themes of the discussion was the role of technology in advancing the halal ecosystem. Mr. Khalawi praised the integration of blockchain, artificial intelligence (AI), and e-commerce as tools to enhance transparency, traceability, and consumer trust.

“Digital solutions are revolutionizing the halal supply chain,” he explained. “From farm to fork, blockchain ensures that products meet halal standards at every stage, while AI optimizes resource use and reduces waste.”

He also called for greater investment in halal tech startups, urging governments and private sectors to support innovation in areas like halal pharmaceuticals, logistics, and fintech.

Mr. Khalawi underscored the critical role of small and medium enterprises (SMEs) and women entrepreneurs in driving the halal economy forward. “SMEs are the backbone of the halal industry, and women are its untapped potential,” he said.

He highlighted initiatives led by the ICCD to provide training, funding, and market access to SMEs, particularly in underserved regions. Similarly, he praised programs empowering women entrepreneurs, noting that their leadership is essential to fostering inclusivity and innovation.

The interview also addressed the need for harmonized global standards to facilitate trade and build consumer confidence. Mr. Khalawi stressed the importance of partnerships between international organizations, governments, and private sectors to overcome barriers such as certification inconsistencies and trade restrictions.

“Unified standards are the foundation of trust,” he asserted. “By working together, we can create a seamless halal ecosystem that benefits producers and consumers alike.”

Mr. Khalawi commended Saudi Arabia’s leadership in advancing the halal agenda, aligning with the Kingdom’s Vision 2030 goals. He noted that Makkah’s unique position as the spiritual heart of the Islamic world makes it an ideal hub for fostering collaboration and innovation in the halal sector.

“Makkah is not just a host—it is a symbol of unity and ethical leadership,” he said. “This forum is a testament to the Kingdom’s commitment to shaping the halal future.”

Concluding the session, Mr. Khalawi issued a call to action for stakeholders across the halal ecosystem. “We must move beyond dialogue and take concrete steps to implement these strategies,” he urged.

Hafiz Maqsood Ahmed is the Editor-in-Chief of The Halal Times.

Courtesy: the Halal Times

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BUSINESS & ECONOMY

Can Trump Halt the BRICS De-Dollarization Effort?

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1 month ago

February 23, 2025

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Timothy Hopper

Various efforts to reduce reliance on the US dollar in global trade are putting the future of this dominant currency under a spotlight. Donald Trump, the newly elected US president, has returned to the global economic stage with the same aggressive style and approach as before. This time, Trump has set his sights on the BRICS group, launching threats and criticisms from the outset. BRICS, composed of major economies such as Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE, is currently discussing the creation of a common currency that could challenge the dollar’s long-standing dominance in global trade.

Trump has responded to these moves with harsh rhetoric, threatening 100% tariffs and the complete exclusion of BRICS members from US markets should they continue to push for de-dollarization. Yet Trump’s remarks have drawn renewed global attention to the question of the dollar’s future.

Reacting to BRICS discussions about creating a rival currency or supporting the adoption of an alternative to the dollar—which would likely spell the end of the dollar’s dominance in global trade, a position it has held since World War II—Trump stated: “We urge these countries to abandon the idea of creating a rival currency or agreeing on an alternative to the dollar. Otherwise, they will face 100% tariffs, completely losing access to America’s unrivaled economic markets.” Recently, Trump also threatened to impose a 25% tariff on all imports from Canada and Mexico, along with an additional 10% tax on goods made in China.

On the surface, Trump’s tactics might seem like they could strengthen the dollar’s position; however, a deeper analysis suggests they will backfire. Instead of deterring BRICS countries, they might actually spur their efforts forward, with China in particular taking the lead to accelerate the de-dollarization process. Long suspicious of Washington’s use of the US dollar as a geopolitical tool, China has spent the last decade slowly building up alternative financial systems, for example by increasingly using the yuan for international trade settlement and expanding Beijing’s direct influence through the Belt and Road Initiative. The Chinese government has also diversified its foreign reserves, reducing its reliance on the US dollar in favor of gold and other currencies.

From this perspective, Trump’s statements are not a deterrent for BRICS countries but rather a rallying cry for urgent action. His persistent use of tariffs and sanctions as tools of economic diplomacy has not only deepened divisions between the United States and rival nations but also fueled distrust among US trading partners. This approach will undoubtedly drive other nations to seek alternatives to the dollar. China and Russia, as key targets of US sanctions and trade wars, are at the forefront of these changes, having signed agreements for trade in local currencies and deepened cooperation under the BRICS framework.

While the creation of a BRICS common currency or adoption of a US dollar alternative remains entangled in logistical and temporal challenges, the initiative symbolizes the bloc’s collective determination to build a financial system that is less reliant on the United States. Trump’s repeated threats may disrupt these efforts in the short term, but they will inevitably validate the concerns underlying these initiatives: the fear that the United States wields its economic power with little regard for long-term global financial stability, and solely in pursuit of its own unilateral interests.

For China, locked in strategic competition with the United States, shaping a new and favorable global order extends beyond economics. These initiatives are part of Beijing’s broader ambitions to establish itself as a global superpower. A multipolar financial system would reduce China’s and other BRICS countries’ vulnerability to US economic pressures, granting them greater freedom to pursue strategic goals on regional and global scales. For example, China’s digital yuan project is part of this vision, potentially serving as an alternative to dollar-based international payment systems, particularly in emerging markets.

Ultimately, the dollar’s dominance has been built primarily on trust—a belief that the United States will act as a responsible leader in the global economy and that dollar-based assets will remain stable and accessible. However, by weaponizing the dollar through sanctions and tariffs, Trump risks undermining this trust, not just among adversaries but also among allies. As this trust wanes, the dollar’s status as the world’s reserve currency is also weakened.

The paradox of Trump’s aggressive posture toward de-dollarization is that by favoring tariffs and sanctions, Trump is accelerating the very trends he seeks to combat. If he fails to change course, the world may soon find itself more united against Washington.

Courtesy: Geopolitical Monitor

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