Recession in the economy - what is it in simple words? Examples of recessions

Recession in simple words – this is a recession in the economy of a particular country/region or the world as a whole; during this period, production rates also decrease. This is a natural phenomenon; it can be considered as a small retreat before conquering new heights. During a recession, the standard of living of most of the population decreases, business activity decreases, which affects the state of business. Today we’ll look at how to recognize an impending recession and how to hedge your bets so that a recession doesn’t become a disaster.
From this article you will learn:

1. Recession in the economy - what is it in simple words?
2. The causes of the recession and the pattern of its development
3. Types of Recessions
4. Factors indicating a recession is approaching
5. Examples of recessions in the global economy
6. What to do during a recession
7. Conclusion

World recession

At the turn of 2015-2016, many major players in the international financial market started talking about an approaching global recession. Every month, more and more managers, business owners, investors, analysts and experts share pessimistic forecasts.

The famous Japanese brokerage house Daiwa was one of the first to speak about the impending global financial crisis. Before official statements from representatives of this organization, no one dared to be the first to express their opinion. Among the possible reasons, the unstable situation in the Chinese economy was named.

Daiwa representatives also believe that the looming global recession will be the largest in the history of world economies.

Recession period

If we talk about the Russian economy, the first alarming signals came back at the end of 2013. It is too early to talk about the end of the recession. Moreover, the crisis that has broken out has already been called the largest in the history of the state’s economy. The only exceptions are the so-called transformation shocks associated with the transition from a planned to a market economy.

The main factors destabilizing the Russian economy today are considered to be the global recession, sanctions from the United States and Western European countries, as well as the financing of military campaigns.

Dynamics

During its development, the crisis goes through several stages:

• Latent. At this stage, the preconditions are just maturing; they have not yet broken through.
• Period of collapse. At this stage, contradictions gain strength, old and new elements of the system come into conflict.
• The period of mitigation of the crisis. At this stage, the system becomes more stable, and the prerequisites for economic recovery are created.

Causes of recession

Today, the Russian Federation remains a state with a resource-based economy. For this reason, the fall in the export price of gas, oil and other minerals becomes the main cause of recession and a sharp decline in economic growth. Even a slight decrease in the cost of resources affects budget revenues. The deficit is growing, requiring additional spending to cover it. To solve this problem, the state is resorting to unpopular measures: cutting funding for social programs, cutting costs for medicine, education and culture. Often such temporary measures further enhance the negative effect.