World Economy, August 22, 2019: Recession occurs when output, production declines in major economies for two successive quarters. Indian Financial year is divided into four quarters i.e Q1, Q2, Q3 and Q4 and if there is a decline in two successive quarters is termed as Recession.
But Global Recession is a little different which is defined by the IMF. And according to IMF, they don’t just focus on the decline in growth rate but also includes a decline in employment rate, and less aggregate demand. All these factor clubs together and commonly known as Global Recession. Till 2018 Global economy was growing at the rate of 3.5 % and if it falls below 2.5% which is a threshold it is considered as Global Recession.
In the current scenario,
We all know the trade war between USA and China. That is costing a decline in growth rate not only in their economies but also affecting the global economy. Another factor is Brexit contributing equally to the global recession. Country centric trade is surging. Also, the fourth-largest economy of the world, Germany in its Q2 i.e. from April to June has registered a slowdown in the growth of 0.1%. China and US growth are also slowing down. China and India unemployment rate is rising and has reached the highest in 45 years affect global economy equally.
World-leading investment bank Morgan Stanley stated that if the trade war continues for the next Six-month world economy will reach to 2.8% close enough to 2.5%. USA and China seriously need to talk on trade war in order to save the world from the Global Recession