What is recession
Stock markets often decline before an economic recession. During a recession, the entire country's economy comes to a standstill and businesses across the country are affected, especially those made in the country. A recession is usually defined as a significant decline in economic activity in the market. This decline lasts more than a few months and is usually visible in real GDP, employment, real income, industrial production, and wholesale-retail sales.
Causes of recession
What are 5 causes of a recession
High interest rates
In such a case, customers are paying higher interest rates. Like real estate, gold, electronic equipment, home loans, higher interest rates etc.
Decreased consumer confidence,
Usually, customers lose faith in products and services or their trust starts to wane. Whether it is about quality or prices, customers start to avoid spending.
reduction in labor prices,
Skilled workers get paid more than unskilled workers. And most of India's population is unskilled. Even skilled people have low skills. For example, in the IT sector, the percentage of engineers skilled in the latest technologies who get higher salaries is low.
If the sales are not as per the company's expectations or the sales are down, then the companies try to reduce the expenses of the company by firing the employees. By doing this, the company also makes its investors happy and does not hesitate much in paying the interest taken from the banks.
reduction in domestic product
Trade deficit occurs when imports are more than exports, there is less demand for the products of the country's companies in the international markets, the country has less money to invest, when the government suddenly makes big changes in the policies and when there is inequality and poverty in the country.
International investors (FIIs) start withdrawing their money and due to the high interest rates of the banks of the country, the domestic companies start cutting costs because when the product itself is being sold, what will they do by keeping labour.
high unemployment rate
There are many reasons for unemployment which can be different for every country like over population, unskilled people, education, poverty, export and import, low supply, etc.
Recession example
When recession comes, first of all we will see an increase or market in these few things. Oil consuming and fuel consuming things will increase, there will be a big increase in energy, interest rates will be expensive, potatoes, tomatoes, onions, flour, rice, sugar, gas etc. will become expensive.
Companies will start firing their employees, due to inflation people will use products and services less or will keep them aside for a few days.
The stock market will fall, the economy will collapse, small companies will be sold, people will stay at home so the population will also increase.
What happens in a recession
First of all there will be recession in stock market, unemployment will rise, national debt will rise, sales of companies will go down, investors will not invest, pressure of inflation will increase on the government, interest rates will rise,
top companies will close down. Anarchy will spread in the country, people will die of hunger, children will not be able to study, people will commit thefts, incidents of beatings will increase, retail sector, tourism, hospitals, services, real estate, manufacturing and warehouse will be affected the most by this.
When was the last recession
According to the World Bank, in the past seven decades the world economy has experienced four global recessions: 1975, 1982, 1991 and 2009. If we do not include the recession like Corona, then we can imagine what those recessions would have been like.
It is believed that Argentina, Ukraine, Jamaica have seen the most recessions and the country with the least recession is Vietnam which has managed to escape recession.
Who is safe in recession
The most secure people in a recession are those who have made FD fixed deposits in banks and post banks because there are guaranteed returns and those who are financial advisors, accountants, hospital people, banks and people from the education sector.