Recessions and Economy Downtimes
A lot of people have been emphasizing on the word Recession and to my surprise, a lot of them do not even know what a recession is. Some people will call a recession a period in time when there is no money to spend in a country, some say a period when the stock market go down while others say a recession is a period when companies close their door on a higher scale due to inflation, deflation or any other financial related problem. At some point, this claim can be valid but they are valid as outcomes of a recession and not the meaning of a recession.
Recession is a period about 6 months when there is a decline in the economic activity of a country caused by a reduction in gross domestic product. Although, it is said to be a downward economic event in two consecutive quarters, this year’s recession is said to have started before 6 months. From the great depression, the great recession, the great lockdown and many more recessions are often linked with other factors like employment and pay, manufacturing, and retail. When there is a reduction in this other factors also, there could be a recession.
In most cases, a recession often last about a year on an average and it is often accompanied with symptoms like low industrial activities, reduction in export and import. The result of a recession is always bad as businesses start to experience a decline in revenue, and so many of this businesses may go bankrupt.
When the economy is healthy, things go smoothly and money flows regularly because people are paid for the work they do and consumers are willing to spend money to buy goods and services as they are sure that their jobs are safe but when consumers stop to spend money, there is a recession knocking. Stock market crash, inflation, increase in interest rates and lack of trust in the economy from consumers and investors can cause a recession.
We are currently in a recession and this is as a result of a halt in all economic activities in the world. Unlike several recessions that happen on a regional base, this is happening worldwide, thanks to the Covid-19 pandemic lockdown. One question a lot of people are asking now is how long will it take for the recession to be over?