A Global Recession is a period of widespread economic decline that affects multiple countries around the world. It is characterized by a significant contraction in economic activity, including a decline in gross domestic product (GDP), rising unemployment, reduced consumer spending, and a slowdown in international trade.
The International Monetary Fund defines a global recession as "a decline in annual per capita real GDP growth rate of 3.0 percent or less, backed up by a decline or worsening for one or more of the seven other global macroeconomic indicators, including industrial production, trade, capital flows, oil consumption, unemployment rate, per capita investment, and per capita consumption".
Here are some of the major recessions of the world since 1900 and their reasons:
Great Depression (1929-1939): The Great Depression was caused by a stock market crash in the United States, which led to a global economic downturn. The depression was characterized by high unemployment rates, low economic output, and deflation.
1970s energy crisis: The 1970s energy crisis was caused by a global oil embargo by the Organization of the Petroleum Exporting Countries (OPEC), which led to a significant increase in oil prices. The crisis resulted in high inflation rates and a global economic downturn.
Early 1980s recession: The early 1980s recession was caused by a combination of factors, including high inflation rates, high-interest rates, and a decline in consumer spending. The recession led to high unemployment rates and a decline in economic output.
Black Monday (1987): Black Monday was a global stock market crash that occurred on October 19, 1987. The crash was caused by a combination of factors, including program trading, high valuations, and a decline in consumer confidence. The crash led to a global economic downturn.
Dot-com bubble (2000-2002): The dot-com bubble was caused by a rapid rise in U.S. technology stock equity valuations fueled by investments in Internet-based companies. The bubble burst between 2001 and 2002, leading to a significant market crash. The bubble was based on little more than optimism feeding on itself, and it was pricked in 2000.
Global financial crisis (2007-2009): The global financial crisis was caused by a combination of factors, including subprime mortgage lending, high levels of debt, and a lack of regulation in the financial sector. The crisis led to a global economic downturn, high unemployment rates, and a decline in economic output.
2018-2019 Global Recession: The 2018-2019 global recession was characterized by highly synchronized economic and financial disruptions in many countries around the world. The recession was influenced by various factors, including rising trade barriers and associated uncertainty, country-specific weakness in large emerging market economies, geopolitical tensions, tightening financial conditions, and a slowdown in some economies.
Global recessions are significant events that can have long-lasting implications for economies, businesses, and individuals around the world. They underscore the interconnectedness of the global economy and the importance of coordinated policy responses to address economic challenges on a global scale.
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