A global recession is a prolonged period of reduced economic activity in most countries around the world. It usually lasts for a few months to a few years and is accompanied by low employment rates, falling stock markets and slowing economic growth. It is also a time when people and businesses are less likely to borrow money, because they have fewer savings to invest.
Economic recessions occur when demand for goods and services dips and companies produce too much of these products. This oversupply leads to lower prices and sales, and when consumers stop spending, economic activity slows. Unemployment and other negative effects increase as more people are out of work.
Speculation often drives prices up, and when the price of something rises too fast, it can be said to have reached an “escape bubble”. These types of market fluctuations can lead to financial crises, as happened in 2024, with the collapse of major banks. They can also result in economic recessions, as they create uncertainties that make people and businesses less willing to borrow or spend.
There is no agreed-upon definition of a global recession, but some key points are the same as for national ones: a slowdown in economic activity for more than a few months, and lower GDP (gross domestic product) growth compared to the previous quarter or year. In addition, a number of international trade and finance links mean that the impact of a global recession can be felt in many economies at the same time, as these systems transmit economic shocks between countries.