What Is the Impact of a Recession on a Country?

Economic recession is a term used by bourgeois economists for the economic crisis. I believe that the economic crisis is only a temporary "recession" in economic development. The recession is manifested by a general decline in economic vitality and the consequent massive unemployment of workers. A severe recession is defined as a depression. ^[1]

economic recession

The economic downturn may cause multiple economic indicators to decline at the same time, such as employment, investment and corporate profits.

Recession global economy

The global economic recession in 2008

As the world economy and the economic indicators of major countries have suddenly turned from an upturn to a downturn at the beginning of this year, the world s economic growth has once again hit the wall and the new wave of financial crisis is about to continue to ferment internationally. China s Manufacturing Purchasing Managers Index (PMI), which was announced on June 1st, continued to decline slowly. Concerns over the slowdown in China s GDP growth and rising inflation have further stimulated speculation about the second bottom of the global economy. However, some analysts believe that the so-called "bottom dip" needs to be viewed with caution, and the global economy may still stabilize in the near future. ^[2]

According to a report released by the China Federation of Logistics and Purchasing on the 1st, the PMI index measuring the overall prosperity of China's manufacturing production and marketing was 52.0% in May, a decrease of 0.9% from April. Among them, the new order index and production index were 4 The monthly decline was 1.7% and 0.4%, reflecting the further slowdown in the growth of manufacturing operations. Just last week, Goldman Sachs lowered its GDP growth forecast for 2011 and 2012 based on inflation and oil prices.

Regarding the slowdown of China's economic growth, "Japan Economic News" analysis on May 31 stated that under the general policy of excess liquidity and resistance to inflation, the rapid development of the real economy of China's manufacturing industry has encountered certain resistance. The increase in costs, the deterioration of the lending environment, and international trade barriers have reduced the competitiveness of trading companies and caused a large loss in orders. In addition, analysts said that the recent drought and power supply crisis that China has encountered have led to increased production costs and suppressed manufacturing and service capacity. An analyst at HSBC predicted on May 31 that the Chinese economy could experience a "hard landing."

The slowdown of China's economic growth has caused the conjecture that the world economy is "hitting the wall" prevailing among public opinion and economic circles. A report released by JPMorgan Chase Bank in May showed that the total output of the global industry has reached a 21-month low, while the global output price is much higher than the historical long-term average by nearly 10 percentage points. The recent recession in the world economy is also verified by economic data from major economies. According to the US Department of Commerce, the economic growth rate in the first quarter of the United States was 1.8%, which was much lower than the 3.1% in the fourth quarter of last year, and the growth rate of the manufacturing industry has fallen to its lowest point in seven months in the past month. According to CNN s May 31 report, Goldman Sachs and Merrill Lynch have each significantly reduced their US second-quarter growth expectations and expect the number of new jobs in the month to fall to approximately 15 from 240,000 in the previous month. Ten thousand. The economic data of Japan, which was hit by the earthquake, is even more bleak, with a negative GDP growth of 3.7% in the first quarter. Even considering domestic demand driven by post-disaster reconstruction, the actual growth rate this year may only be 0.6%. In addition, the economic and financial conditions of Greece, Portugal, and Ireland, the "heavy-hit countries" of the European debt crisis, are difficult to improve. The intensified contradictions within the European Union due to the European debt crisis have made it difficult to change the overall economic downturn in the euro area in the short term.

When developed economies face economic depression and financial crises, emerging economies also face economic difficulties. On May 31, data released by India showed that India s GDP growth rate in the first quarter was 7.8% after conversion, the slowest growth rate in five quarters. Countries such as Brazil and South Africa are also under pressure from excessive inflation.

Regarding the "rapid braking" of the global economy this year, some analysts said that it was the result of "a comprehensive accumulation of various disasters", including some unexpected factors. Goldman Sachs analyst Zach Pender said on May 31 that the Japanese earthquake hit the global manufacturing supply chain more than expected, and the US economic foundation was even shaken. In addition, the delay in resolving the European debt problem has also delayed the economic growth of advanced industrial countries and disrupted the confidence of financial markets.

However, Zhou Shijian, a senior researcher at the China-US Relations Research Center at Tsinghua University, told the Global Times that the global economic growth is now slowing down and it will not be a second low. The performance of the global economic downturn is prominent in Japan, but the Japanese economy will improve after the disaster in the second half of the year. South Korea's "North Korea Daily" said that as long as the European debt crisis is resolved quickly and properly, the disruption in financial markets can be contained to a certain extent. In addition, if China can gradually release the "steps" of growth on the basis of controlling inflation, it can drive regional and even global economic recovery.

Recession inflation

Zhou Shijian said that the current world economy is most concerned about inflation. The United States may take hidden currency printing actions to stimulate the economy and will not engage in quantitative easing monetary policy as much as it used to. This is undoubtedly worse for the emerging countries, especially China, suffering from inflation. As a result, all major resource products denominated in US dollars will rise in price.