A global recession is a slowdown in economic activity that can last from 18 months to more than two years. It occurs when economic conditions deteriorate across countries and industries. It leads to falling corporate profits, household incomes, and investment spending. It also affects international trade and can lead to job losses. It’s a serious event that can bring the world economy to its knees and threaten long-term prosperity.
Global recessions aren’t common, but they do occur. The Great Recession of 2007-09 was one of the most severe in recent history. The global economy recovered slowly from that downturn, but it still left lingering effects.
Recessions typically begin when consumers stop spending as rapidly as they did during an economic boom. These contractions can be caused by a variety of factors, including an oversupply of goods and services that aren’t being consumed. Uncertainty about the economy, which can be generated by wars or pandemics, makes businesses and consumers more cautious. They’re less likely to invest or spend as a result, which causes economic activity to slow down.
Recessions can also be triggered by sharp increases in the prices of raw materials that are used to make products and services. For example, a steep increase in oil prices raises overall energy costs and reduces consumption. They can also be caused by a country’s attempts to cool off inflation by employing restrictive monetary or fiscal policies.
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