Are massive layoffs by tech giants a sign of looming recession?

DNA Special: Are massive layoffs by tech giants a sign of looming recession? (file photo)

Big tech and other companies are laying off their employees these days. The giant e-commerce company Amazon is also planning to lay off its 11,000 employees in the name of cost-cutting, according to a New York Times report. This will be the biggest layoff in Amazon’s history. 

Earlier after buying Twitter, Elon Musk fired about 3,700 people including Twitter CEO Parag Aggarwal. Similarly, Facebook’s parent company Meta has also fired about 11,000 people. 

Although these companies may have their own reasons behind massive layoffs, but these signs are not good as they indicate recession may have reached once again. GDP growth has been badly affected in several countries including the US and Europe.

IMF has projected the global economic growth for 2023 to be 2.7 percent. Whereas in January this year, he had predicted this growth rate to be up to 4.2 percent.

Recession in technical language is considered when the GDP growth of a country remains negative for two to three consecutive quarters i.e. 6 to 9 months. But in simple language, a recession means there is less demand in the market.

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But do you know what is the biggest cause behind this recession and inflation? It is the ongoing war between Russia and Ukraine.  Also, Covid-19 had caused huge damage to the economy, but this war aggravative the situation. 

Due to this war, the import of grain, crude oil and other things has been affected. Not only this, but Russia has also reduced its supply of gas to western countries. Apart from this, the oil-producing countries have also refused to increase the production of oil, due to which, the prices of oil and gas have increased wildly, and it is affecting everything including transport, production etc.

The second reason the behind looming recession is China which is still adamant about the Zero Covid policy, due to which the global supply chain has been affected. 

And even after increasing the demand for different goods and services around the world, their production could not be increased. That is, here it is not just a matter of decreasing demand, here the supply is also decreasing.

And to maintain the supply, the Central Banks around the world are increasing the interest rates so that loans become costlier and people spend less.

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