What is an economic recession locally and internationally? ~ Investment,finance for businesses

Thursday, September 16, 2021

What is an economic recession locally and internationally?

 What is an economic recession

What Is An Economic Recession Locally And Internationally?

Simply Economic Recession :

We speak of a recession when the economic activity of a country declines, but temporarily. All economic actors, from businesses to households, including the financial markets, suffer the consequences of this normal phase of different economic cycles. , the world has only experienced four recessions due to economic crises, in 1974, 1993, 2009 and 2013. However, due to the sharp drop in economic activity due to the Corona virus epidemic, the world is currently in a state of economic recession. The major, most dangerous recession I have experienced since World War II.

The recession: one of the phases of the cycle of economic fluctuations 

An economic recession is a limited period of time when a country's activity stalls. This is a slowdown in the rate of economic growth in which production continues to increase but at a slower pace. This phenomenon should not be confused with a simple economic slowdown, which is very frequent. On the contrary, recessions are rarer.

The recession is an integral part of the cycle of economic fluctuations, which are four in number: expansion (increase in production), crisis (financial, weak demand, etc.), recession, and recovery (which announces a phase expansion).

In Algeria, as the National Institute of Statistics and Economic Studies (INSEE) points out, a recession is measured by gross domestic product (GDP). This indicator makes it possible to assess the wealth created by all economic actors, public and private, in a given territory. GDP represents, as INSEE points out, "the end result of the production activity of resident producer units".

The economic activity of a country is said to be in recession when its GDP declines, that is to say exhibits a negative growth rate, for at least two consecutive quarters.

When the recession is marked by a very significant slowdown in economic activity that lasts over time, we then speak of economic depression, a phase which corresponds to a sharp and lasting drop in production and consumption, leading to a fall in the economy. GDP for several years, and with the consequences of increasing business failures and mass unemployment.

Signs and consequences of an economic recession

A recession is always a symptom of an economic crisis. It reveals the inability of a country to produce more wealth than the previous year. Even, economic activity is declining, with the ripple effects of stopping certain production units, destroying many jobs, losing the purchasing power of households, etc.

All economic actors in a country suffer the consequences of a recession, that is, the slowdown in economic activity which leads to the slowdown in wealth creation. Faced with a slowing economic situation, households, for example, are more reluctant to consume because of the fear of tomorrow. A drop in demand that necessarily affects companies already affected by the economic slowdown at work during a recession. Financial markets are also becoming more cautious and investors are losing confidence.

It is usually at this stage of the recession that the leaders of the states concerned are positioning themselves to counter this phenomenon of recession. By intervening more to support economic activity and households, or by letting the market correct itself, depending on individual political and economic convictions.

If it is observed at the level of a country, a recession also has international consequences. Indeed, a country in recession sees, during such a situation, its international trade and financial exchanges slow down or decrease in a significant way. In a globalized economy, the repercussions of a recession play out globally as countries are more or less independent of each other in commercial and financial matters.

We saw this clearly, for example, with the 2008 financial crisis. It started in the United States and spread around the world in the form of a global recession that affected a large number of countries.



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