Countries in Recession

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Recession, the technical name given to two consecutive quarters of negative growth for any country, is looming over the world like a sinister scarecrow. Economists say that economic activity has its own regular ups and downs, with a regular pattern of economic expansion, also called Recovery and economic contraction, infamously known as Recession. They also state that it is a cyclical phenomena, and give it another name: Business Cycle. So what causes this recession and what are its ramifications?

The causes of recession are wide and sometimes unexplained. But the main reasons can be listed as:

1. Decrease in the consumption by the public, mainly due to low consumer confidence (Paradox of Thrift)
2. Decrease in investment by the Government, to control rising budget deficit
3. Decrease in investment by the Companies
4. Less demand of goods in the foreign market, more important for export-oriented countries
5. Bubble busts, like the dot-com bust of 2000 and housing-bubble bust of 2008
6. Some other politico-economic causes like currency crisis, war, etc.
For a more detailed explanation of causes of recession, refer this page.

The fallouts during and after recession can have far reaching effects, mainly categorized under political, economic, social and technological effects: (Some of them might refer to controversial events)

Political	Loss of people’s faith in the ruling party Failure of International Organisations, like the League of Nations Government changes in the ailing countries Setback to Climate change talks & treaties Rise of extreme nationalism and protectionism
Economic	Rise in Unemployment Increase in bankruptcy Disinflation Banks’ willingness to lend decreases Failure of Stock Markets Lower interest rates Increased monopoly in the market Fall in productive capacity of the economy
Social	Rise in criminal/illegal activities Less expenditure on welfare activities Pessimism rises leading to fall in birth-rate and increased suicides Rise of a new class in the society: formerly middle class
Technological	Less spending in new and breakthrough research areas Investment in green technology reduces Evolution of innovative and cost-effective technology

As of today, most of the major economies of the world are witnessing negative growth. The following table highlights the countries in recession and their GDP as a % of the World GDP:

Countries in Recession	GDP (nominal) as a % of World GDP
USA	25.30
Japan	8.02
Germany	6.08
Italy	3.86
Sweden	0.83
Denmark	0.57
Ireland	0.48
Hong Kong	0.38
Singapore	0.29
New Zealand	0.24
Latvia	0.05
Estonia	0.04

Source: IMF

USA, the largest economy, has witnessed a dip in its growth in the last quarter, with sharp rise in unemployment.

According to National Bureau of Economic Research, an independent research organization, US has been in recession throughout this year. A recent release on its website states that Real GDP of United States decreased at an annual rate of 0.5 % in the third quarter of 2008. This is attributed to decrease in consumer confidence, leading to less consumer spending. Other factors like negative contributions from the residential fixed investment and equipment and software are cited as the reasons of this slowdown. A list of all US business cycles can be found here.