Recession

Economy

Quick Definition

A Recession is a period of economic decline marked by reduced economic activity, falling GDP, lower employment, and decreased consumer spending.

Detailed Explanation

A recession occurs when an economy experiences negative growth for two consecutive quarters. During this phase, businesses slow down, unemployment rises, and overall demand in the economy decreases.

Economic conditions are monitored and managed by institutions like the Reserve Bank of India in India through monetary policies.

Key Characteristics of Recession

  • Decline in GDP (Gross Domestic Product)
  • Increase in unemployment
  • Reduced consumer spending
  • Lower business profits

Causes of Recession

  • High inflation or interest rates
  • Financial crises
  • Reduced demand
  • Global economic slowdown

Impact of Recession

  • Job losses
  • Business closures
  • Lower investment returns
  • Economic uncertainty

How to Prepare for Recession

  • Build an emergency fund
  • Reduce unnecessary expenses
  • Diversify investments
  • Avoid excessive debt

Example

"If a country’s GDP declines for two quarters and unemployment rises, it is considered a recession"

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