India's GDP growth has been recorded at 4.5 per cent for Q2 of FY20. The last time India witnessed a GDP growth of less than 5 per cent was in the fourth quarter of FY13, when it grew at 4.3 per cent. While the Indian economy is not in the pink of health, it is still slowly pacing ahead. However, amid concerns of the slowing GDP growth, it must be mentioned that India is currently facing what is known as slowdown and not what is believed to be recession.
What is recession?
For the uninitiated, an economic recession signifies a shrinkage in the GDP for two or more consecutive quarters, while an economic slowdown is when the GDP continues to grow but in a slower rate than the previous period in question. A slowdown is a pointer towards recession and usually precedes one but does not necessarily lead to recession.
Recession means that the country is producing and earning less than what it did before. Consumers tend to spend less as people lose confidence in the growth of the economy. Less spending means that there's decrease in demand, which, in turn leads to a dip in production. Such events also lead to lay-offs and job loss and mark a spike in unemployment.
Slowdown, on the other hand, means that production and earnings of the economy is not growing in the same pace as before.
Which countries are facing recession?
Some of the key economies in the world are in the verge of recession raising fears about the global economic health.
1. Germany: After a dismal growth of 0.4 per cent in the start of the year, the German economy shrank by 0.1 per cent in the second quarter pushing the European country into the verge of recession. There are fears that the country might fall into an official recession by the end of the year, as mentioned in a report in The Washington Post.
2. United Kingdom: The UK is facing a similar situation as Germany. Amid the uncertainty over Brexit, UK's growth was recorded at 0.5 per cent in the beginning of the year, after which it shrank by 0.2 per cent.
3. Italy: Italy's growth was recorded at 0.2 per cent in the second quarter and is likely to slip into the negative zone. This is rather bad news for a country that's been witnessing a political crisis.
4. Mexico: While things picked up for the country in the second quarter, it is still not wholly out of the danger zone. Mexico's economy shrank by 0.2 per cent at the beginning of the year and improved to a growth of 0.1 per cent in the second quarter,
5. Brazil: The South American economy shrank by 0.2 per cent in the first quarter and is likely to show negative growth in the second quarter too. Brazil's government is trying to improve the situation by announcing measures to stimulate growth.
6. Singapore: After a growth of 3 per cent in the first quarter, Singapore's economy shrank 3.3 per cent in the second quarter. As its economy heavily banks on exports, Singapore has blamed the US-China trade war for its misfortunes.
7. South Korea: Like Mexico, South Korea also avoided recession after the economy shrank by 0.4 per cent in the first quarter but rose 1.1 per cent in the second quarter. Experts do not believe that this performance would last.
8. Russia: The Russian economy only grew by 0.7 per cent in the first half of 2019. An economic institute warned the country that it could be in recession by the end of the year. Russia has been struggling as its oil prices nosedived and other nations put sanctions on Russia for its military actions in Ukraine.
Which countries are in recession?
A few countries including Venezuela and Argentina have seen their economy shrink in the past two years. Venezuela posted a GDP growth rate of -18 per cent in 2018, which is anticipated to decrease to -35 per cent in 2019, as per IMF. Iran had recorded a rate of -4.8 per cent in 2019. IMF expects it to worsen to -9.50 per cent in 2019. Argentina saw a growth rate of -2.50 per cent in 2018 and it's likely to weaken to -3.10 per cent in 2019. The country has witnessed inflation and a rapid drop in the value of the Argentine peso against the US dollar. Sudan, Puerto Rico and Angola saw a growth rate of -2.2 per cent, -4.90 per cent and -1.2 per cent respectively in 2018 and they are expected to stay in the negative zone of -2.60 per cent, -1.10 per cent and -0.30 per cent in 2019, respectively.