What is the recession? How to prepare for the recession? As the risk of a global recession rises, here’s everything you need to know
Delhi, October 13: In the aftermath of the International Monetary Fund’s (IMF) announcement of what many feared, World Bank President David Malpass similarly warned much of the globe (IMF puts it at a third) will experience a recession this year or next and called for targeted support for the poor. After these expert predictions, questions such as “What is recession” and “How to prepare for a recession” started trending on Google.
According to economic experts around the world, the biggest impact of this economic downturn will be felt in America. After that, Britain and Europe could be deeply hit by the recession. China will also pass over in silence. However, India should not panic too much as the IMF said that India is better placed than other countries to weather the crisis. IMF Managing Director Kristalina Georgieva hails India’s economic growth, says ‘the country is a bright spot on this dark horizon’ (Watch video)
What is the recession?
When the gross domestic product (GDP) of a country decreases for six consecutive months, that is to say for 2 quarters, then we speak of an economic recession. On the other hand, if the GDP of a country falls by more than 10% for 2 consecutive quarters, then we speak of depression, which is scary. After World War I, the Great Depression came in the 1930s, referred to as the Great Depression. A recession is short, but its impact can be long-lasting. India will remain fastest growing economy even after 6.8% GDP growth in 2022, IMF says
What happens during a recession?
People can feel significant impacts on their daily lives during a recession. Everything from groceries to shoes is often more expensive and workers may have less job security. Income equality deteriorates, the unemployment rate rises, manufacturing activity declines, and consumer spending declines during a recession.
How to prepare for a recession?
While preparing for a recession, it is important for people to cut expenses and have enough savings to cover three to six months of living expenses. Experts also recommend people stay invested while preparing for a recession. It’s also important to reduce debt, because a lower debt-to-income ratio also expands your credit options in an emergency.
Are we in a recession?
Experts believe that even if the United States and the eurozone head into recession, India is unlikely to have an impact as it is highly decoupled from the global economy. However, amid the threat of recession, the IMF has cut India’s economic growth rate estimate to 6.8% for the financial year 2022-23. But India is in a much stronger position than China, America and Britain. The IMF has estimated that China’s GDP growth could be 4.4% in 2023. While in 2023, India’s projected growth rate will be 6.1%. Amid the threat of recession, this news will bring relief to India.
When was the last recession?
In the post-war period, between December 2007 and June 2019, the world experienced the most severe recession. At the time, the International Monetary Fund (IMF) concluded that this was the most serious economic and financial crisis since the Great Depression. Although the economies of China, India and Indonesia have grown significantly during this period.
The global economy has been repeatedly hit by issues such as the war in Ukraine which has driven food and energy prices up to COVID-19 and the impact on economies, as well as the surge costs and rising interest rates. Global inflation is expected to peak at 9.5% this year before falling to 4.1% by 2024.
(The story above first appeared on LatestLY on October 14, 2022 at 09:52 IST. For more news and updates on Politics, World, Sports, Entertainment and Lifestyle , log in to our website latestly.com).