The GDP growth of India has recorded at 4.5 % for quarter 2 of FY19. India last witnessed less than 5 % at 3.2% GDP in the year 2013. Although the Indian economy is not in its pink of health, it is still growing at a slow pace. Considering all the stats, it is clear that India is not facing a recession but a slowdown.
Are slowdown and recession not the same?
Many times, the recession and slowdown are considered the same but in actual, they are different.
A country is in recession if it has seen shrinkage in the GDP for two or more consecutive quarters, whereas if the GDP continues to grow at a slow speed than the previous period, it is known as a state of slowdown.
Recession means reduction in consumer spending which eventually affects the production leading to lay-offs and job loss adding numbers to unemployment. The slowdown means production and consumption both are happening but at a lesser pace.
Here are few countries that are on the extremity of recession in 2020
The U.K
The uncertainties going on in the country about leaving the European Union have watched its economy shrink for the first time since 2012 recorded at 0.5 percent at the beginning of 2018, after which it shrank by 0.2 percent. Having no-deal Brexit being another reason.
Italy
Half of 2018 was into a technical recession for the EU’s fourth-largest economy from 0.2 percent in the second quarter and was expected to see negative growth. Weak productivity, high unemployment, massive debt and political turbulent together brought the situation of political crisis.
China
The China recession period is inevitable. By pursuing investments like constructing bridges and roads to nowhere and investing in factories that no longer produce competitive products, the Chinese economy is trying to build wealth, which in no means is a productive way to raise the economy.
The trade war between the world’s second-biggest economy and the US has also disturbed the trade across the globe already. IMF estimated 5-8% growth in terms of GDP in 2020 from 6.6% in 2018 and a 6.1% forecast in 2019.
Hong- Kong
The Hong-Kong economy has shrunk for two consecutive quarters. It’s the five months protest that has shattered the country’s economy throwing into “technical recession”. Industries like tourism and retail got adversely affected by this ongoing tumult. The Hong Kong government is warning that the country’s economy may by 1.3% shrink in 2019. Before the protest, the GDP growth was expected to increase between 2%-3%.
Mexico
The economy in Mexico coincides with the US recession cycle with the economy been going down for seven consecutive quarters. The rise in the unemployment rate to a peak of 7.8% in the third quarter of 2020, more than 2 percentage points above the average rate of 5.5% reached during the 2009 recession.
The figure showed that the economy shrank by 0.1 percent quarter-on-quarter in seasonally adjusted terms during the first and second quarters and the same margin in the last quarter. The economy is expected to be better expanding by 1.1 % due to several factors including a recovery in oil and gas output, stronger construction activity, wage gains and a pick-up in public sector spending.
Argentina
The country has faced inflation and a drop in the value of the Argentine peso against the US dollar. It saw a growth rate of -2.50 percent in 2018 and it’s likely to weaken to -3.10 percent in 2019.
Iran
The giving back of US sanctions in 2018 imposed on energy, shipping and financial sectors of the country caused foreign investments to stop investing and hit oil exports. The sanctions stopped not only US companies from trading with Iran, but also with foreign firms or countries that are dealing with the country. Iran’s GDP rate of -4.8 percent in 2019 is expected to nosedive to -9.50 percent by the end of 2019.
Venezuela
The GDP growth rate of 2018 was -18% and is expected to drop down by -35% by end of this year.
According to IMF, the world’s economy will grow at its slowest rate of expansion is 3% in the coming year.
