ODI Explains: When Recession Happens
Recession is costly and it happens in all countries and at various points in the global growth trajectory. A recession simply indicates a slowdown in economic activity in a domestic economy or an average slowdown in global economic activity if it is on the global scale. Broadly, a recession is characterized by a contraction in domestic output and all components of the aggregate demand function – consumption, investment, government spending and net export activity. The observable decline in real income, real GDP, industrial production, employment, sales activities across an economy could last more than a few months . It usually begins with a contraction after a peak and ends after an economy reaches a through. When severe and prolonged, recession results in a depression. An economic slowdown characterized by a recession can be triggered by a variety of phenomena. Based on observable cross-country economic experiences over time, there are several indications that a domestic rec