WORLD RECESSION

WHAT IS RECESSION?
The National Bureau of Economic Research defines: Economic recession as a significant decline in the economic activity spread across the economy.

INTRODUCTION

A recession is a decrease of less than 10% in a countrys Gross Domestic Product (GDP). The decrease must last for more than one consecutive quarter of a year The GDP is defined as the sum of private spending and government spending on goods, services, labor and investment.

HISTORY

HISTORY OF U.S. RECESSION Late 2000's Recession Early 2000's Recession 1990's Recession 1980's Recession 1970's Oil Crisis Late 1960's Recession Early 1960's Recession Late 1950's Recession Early 1950's Recession Late 1940's Recession Recession of 1945 The Great Depression Recession 1926 Post World War I Recession Panic of 1907 1870's Recession 1890's Recession Panic of 1857 Panic of 1837 Depression of 1807 Panic of 1819 Panic of 1797

The Great Recession

AUGUST 1929 - JUNE 1938 (110 months) Stock market crashes all over the world were one of the first stages of the recession. Then, a banking collapse took place in America, and thousands upon thousands lost work. People who had a lot invested ended up mostly with nothing. Businesses closed, workers ran out of work, the stocks were worthless, and even the richer class Americans suffered some from the financial catastrophe that was the Great recession.

GLOBAL RECESSION

IMF regards periods when global growth is less than 3% to be global recessions. The IMF estimates that global recessions seem to occur over a cycle lasting between 8 and 10 years. During what the IMF terms the past three global recessions of the last three decades, global per capita output growth was zero or negative.[27] Economists at the International Monetary Fund (IMF) state that a global recession would take a slowdown in global growth to three percent or less. By this measure, three periods since 1985 qualify: 1990-1993, 1998 and 2001-2002.

RECESSION IN USA

In 2008/2009 recession private consumption fall for the first time in nearly 20 years

UNEMPLOYMENT:
USA employes shed 63,000 jos in Feb 2008 156,000 jobs had been lost in September. In November 2008 533000 jobs were eliminated. In 2008 2.6 million jobs were eliminated. Unemployment rate grew to 8.5 % in March 2009 5.1 million jobs losses till March 2009.

OTHER COUNTRIES

A few other countries have seen the rate of growth of GDP decrease, generally attributed to reduced liquidity, sector price inflation in food and energy, and the U.S. slowdown.

THESE INCLUDE IN
CANADA JAPAN CHINA INDIA

In some, the recession has already been confirmed by experts, while others are still waiting for the fourth quarter GDP growth data to show two consecutive quarters of negative growth.

CAUSES OF RECESSION

Currency crisis Energy crisis War Under consumption Overproduction Financial crisis

EFFECTS OF RECESSION

Bankruptcies Credit crunches Deflation (or disinflation) Foreclosures Unemployment

RECESSION IN PAKISTAN
Pakistans economy still not out of the woods

PAKISTAN IS GEARED UP TO KEEP

Trade

deficit to 4.3 per cent of GDP.

Current account deficit within the range of 5.9 per cent.

But it will continue to be threatened by the dangers of domestic socio political upheavals, intensity in the war-on-terror and global recession.

Effect of recession

Agriculture Prices Assets Debts

AGRICULTURE

However, cotton and rice have registered positive growth of 7.3 and 13.5 per cent, respectively. The combined weight of sugarcane and maize in overall agriculture is 6.2 per cent while that of cotton and rice is 13 per cent. However, cotton and rice have registered positive growth of 7.3 and 13.5 per cent, respectively. The combined weight of sugarcane and maize in overall agriculture is 6.2 per cent while that of cotton and rice is 13 per cent.

PRICES

Food inflation is estimated at 28 per cent during July-March as against 13.8 per cent in the comparable period of last year. Although food inflation has eased during the course of the current fiscal year, the report says it remains painfully high and remained a major cause of concern

ASSETS

Net domestic assets (NDA) have increased by Rs307 billion as compared to increase of Rs627.5billion in last year. However, it is showing an increase of 7.6 per cent in stock during this period, whereas, last year the growth in stock was 20.4 per cent in the comparable period Net foreign assets (NFA) have recorded a contraction of Rs263.9 billion against the contraction of Rs356.4 billion in the comparable of last year.

DEBTS

External Debt and Liabilities (EDL) stood at $49.7 billion or 30.7 per cent of projected GDP for this fiscal year This is higher than end-June 2008 stock of $46.3 billion or 27.6 percent of GDP.

CONCLUSION

When an economy is in a recession the central bank will typically increase the money supplied which will help reduce interest rates; increasing spending. When inflation is a problem, the central bank will typically decrease the money supply, which will increase interest rates; slowing spending