Are We Out Of The Recession?

The definition of “recession” according to economics is a general slowdown in economic activity over a long period of time, or a business cycle contraction. During recessions, many economic indicators contract or slow down. Production as measured by Gross Domestic Product (GDP), employment, investment spending, consumerism, household incomes, business profits and inflation all fall during recessions; bankruptcies and the unemployment rate rises.

However, this recession will not turn into the Great Depression of 1969. The leaders of the developed and developing countries have taken the right steps to prevent a collapse of the financial system and restore economic growth. They have been careful to avoid the biggest mistakes of the Great Depression, such as letting the banking system fail and the money supply collapse. History shows that once these panics burn themselves out, economic growth resumes. Financial markets are already signaling that the panic phase is over.

India as a major developing country is one of those few economies of the world which did not have substantial losses in the crisis, but still our markets came down like a pack of cards. The Indian market is mainly affected by the economies of the developed nations. Some of the analysts feel that we are affected due to the recession affecting the world economy, as when there is recession the world over, there will be consumption of various products and services less  which indirectly will affect India’s trade. Today, lot of Indian companies are shifting their focus from US and European markets to markets like China and local Indian markets so that their profit margins are not affected in a large scale. But, with global slowdown, India might see some job/salary/ incentive cuts which might lead to less consumption, though this might not be on the scale of the western economies.