Over the past seven decades, the world has experienced four major periods of economic recession, the most recent occurring in 2009. During these crises, governments intervened through stimulus and support programs to stabilize economies and restore growth.
Clear signs of an approaching recession include shrinking business activity, declining production, and, in some cases, the closure of companies or branches. Such developments typically lead to fewer job opportunities and higher unemployment, reinforcing the downward economic cycle.
An economic recession is technically defined as a slowdown in economic growth that occurs when an economy stops expanding or begins to contract for a sustained period, Al-Rai daily reports.
It is generally characterized by a decline in gross domestic product (GDP) and is formally identified when negative economic growth is recorded for at least two consecutive quarters.
A recession represents a phase of overall economic downturn, during which production declines, consumer demand weakens, and unemployment rates rise for two quarters or more. The causes of recession vary and may include high inflation, elevated interest rates, financial crises, natural disasters, or the adoption of unsustainable economic policies.
In many cases, a recession occurs when production exceeds consumption, leading to an oversupply of goods and a fall in prices. As producers struggle to sell their inventory, they are forced to scale back production, which in turn affects employment and investment levels.
In simple terms, a recession is a period in which economic activity slows significantly. It is marked by reduced investment, falling corporate profits, rising unemployment, and weaker consumer spending. If a recession is prolonged, it is described as a depression, while an extremely severe downturn may be referred to as an economic collapse.
