Image via Wikipedia

What is recession?  Recession is a slowdown in economic activity for a period of time which contracts businesses. In the period of recession, Gross Domestic Product (GDP) which is a macro economic indicator shows a decline and other factors of investments, household incomes and business profits also indicate a decline.

Generally, governments undertake the introduction of stimulus packages in order to increase money supply in the money market.  In the recent years, U.S was affected with recession due to housing market and sub prime mortgages and as a result consumers have been badly affected as the house prices had dropped. There were severe job cuts in many companies in the year 2008 and as a result unemployment rate increased in U.S which stood at 8.5 percent in March 2009 and there have been 5.1 million job losses till March 2009 since the beginning of recession in December 2007.

The effects of recession are very negative such that there is a possibility of many job losses, bankruptcies, deflation, foreclosures and credit crunch.  Recession can affect any country and with proper economic and financial packages, there are remedies available.

At times, global recession can also occur.  International Money Fund considers that when global growth is less than 3 percent it indicates that there is a global recession. IMF also estimates that global recession occurs between 8 and 10 years.

There should be a constant economic review in order to avoid and prevent recession and it is also important to introduce new economic reforms keeping in view of changing scenario in globalization.