What Is a Recession, What Are Its Causes and Consequences?

In general, the meaning of 'recession', which will start to slow down in the economy, and the recession, which is not expressed, have been discussed. Reses, a recently bored economy exhibiting the markets, is in the dairy products that are curious...


What-Is-a-Recession-What-Are-Its-Causes-and-Consequences
What is Recession?

What is a recession?


In simple terms, recession is expressed as a contraction or contraction in the economy. If a country's economy has contracted for two consecutive quarters, then it means that there is a recession. With a clearer explanation, it is evaluated as the per capita national income standing in place due to the slower pace of growth in the country's economy compared to the population rate. For this reason, the recession effect has a great economic importance for a country and its citizens.


What are the causes of the recession?


  • Economic growth falling below the population growth rate

  • Declining or stagnant national income per capita

  • Increase in unemployment

  • Pause or regression in economic activities

  • Decrease in production activities


All the reasons listed above; It can form the basis for a country to enter recession. In macroeconomics, a recession refers to a situation in which real gross domestic product shows negative growth for two or more quarterly periods in a row. A much longer recession is referred to as an economic collapse.


Policies to increase public expenditures to combat the recession; This results in the elimination of inadequacies in private expenditures through public expenditures in order to balance the economy. With these policies, it is aimed to prevent the decrease in national income levels. At the same time, it is aimed to prevent the decrease in expenditures in the private sector and to enter the expansion process by eliminating the contractionary forces in the economy.


Within the scope of the fight against recession, public expenditures can be kept at the same level and taxes can be reduced. In order for tax reduction policies to be effective, the tax issue needs to be in a very broad scope. In this way, more people can benefit from tax deductions. Therefore, disposable income increases and personal consumption and investment expenditures can increase.


What are the effects of the recession on the economy?


With the recession, it creates a serious impact on the country's economy.


  • The country's economy shrinks.

  • GDP shows negative growth.

  • The country's currency depreciates against other exchange rates.

  • The prices of imported products increase, and accordingly, an increase in inflation arises from the products.

  • While the unemployment rate increases, there is a significant decrease in industrial production.

  • Money and stock markets can be seriously damaged.


Along with such effects, recession can cause certain problems during the time it is experienced in the country.


What are the consequences of the recession?


With a recession, the economy in a country loses momentum significantly. At the same time, there is no recovery on demand and a serious pessimism emerges throughout the country. Especially, a decrease of 1 point, which will occur over the recession, may cause unemployment between 80 and 100 thousand people. In this direction, those who want to start a new business prefer to wait for a while and a real pause occurs throughout the country. In this direction, with the occurrence of a recession, this process continues for 9 to 15 months. Later, the country's economy allows for a gradual revival and an increase in per capita national income at a certain rate.


What can we do individually during the recession?


Recessions affect not only the governments of the countries, but also the people living in that country. Unemployment problems and uncertainties about retirement plans during recessions can be reflected in people as problems in personal relationships and worsening mental health. Therefore, it may be necessary to make preparations to cope with this process individually. In this direction, creating personal emergency funds, making expenditures more planned, focusing on reducing debts, investing in professional development and establishing more real retirement plans; There are smart moves that can be made.


Periods of economic recession can cause people to experience various psychological problems. In times like these, when stress is felt deeply, being in open communication with people nearby about economic concerns has several benefits. Experiencing economic worries and the stress of it alone does not solve anything. In addition, not making big plans for the near future can also make sense, as it minimizes the risk of disappointment. It is also seen as a successful policy to increase the number of emergency funds if the number of dependents is large and there are concerns about it. Taking care of individual psychological and physical health is considered the first condition of coping with the recession.


What should be done to avoid recession?


Things to do to avoid recession are listed as follows:


  • The employment rate should be increased,

  • Production and trade sectors should be given incentives,

  • Anti-inflation policies should be adopted,

  • In case of sudden economic crisis, economic precaution models should be available.


Recession is a type of risk that especially growing and developing countries face a lot. Economic recession, that is, recession, is most common in developing countries.


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