A global recession is a period of economic decline in multiple countries. The economy’s gross domestic product (GDP), or the total value of all goods and services produced in a region, falls during a recession. This can also mean higher-than-normal levels of unemployment and inflation, which can make consumers less willing to spend money.
There are a number of reasons for a global recession, but a key factor is that economies in large developed countries slow down at the same time. This is called a “synchronized” recession and has happened several times in the past. It is more likely when large countries have strong trade and financial links with each other.
Other factors that can lead to a global recession include financial crisis, such as a sudden drop in stock prices and investment losses. Another reason is that investors lose faith in the economy and pull back, leading to lower demand and weaker production. Inflation can also trigger a recession because it increases the cost of producing goods and services, making them more expensive than they are in real terms.
Other causes include bubbles, which occur when the price of something rises sharply due to market trends or speculation. This can happen with many things, from tulips in the 17th century to housing markets in 2008. When supply exceeds demand and investors start selling off their assets, the price falls and the economy enters a recession. Economic downturns are not always easy to recover from, and the longer they last, the harder it is for the economy to come out of them.