A global recession occurs when economic activity declines for several months in a row, and the resulting economic damage impacts multiple countries. The most common symptom of global recession is higher unemployment rates, and when the rate rises, it’s difficult for companies to hire enough employees to keep up with demand. A global recession can also cause inflation, which can make it harder for people to afford goods and services. In addition, a global recession can affect stock markets, and when stocks drop, investors see losses (Bloom, 2017).
The most recent example of a global recession was the Great Recession of 2007 to 2009, which coincided with the 2008 financial crisis. While the impact of this recession varied by country, most developed countries saw a decline in economic activity.
Several indicators have emerged that suggest the global economy is close to entering a downturn. For one, a fall in consumer confidence has been much sharper than in the run-up to previous global recessions. Inflation has also been rising rapidly, which could force central banks to raise interest rates quickly to reduce inflation pressures.
A global recession would have serious ramifications for the world’s biggest economies, including the United States and China. The collapse in commodity prices is another signal, with energy and industrial metals slumping the most since April 2. These falls reflect declining global demand for raw materials, especially from China, the world’s largest consumer of energy and industrial metals.