A global recession is a sharp decline in economic activity in multiple countries that persists for an extended period of time. A global downturn is a major setback for economies and can lead to financial crises, job losses, and social unrest. In the past, several events have contributed to global recessions, such as the Great Depression in 1930 and the 2008 financial crisis.
In contrast to national recessions, which are usually measured based on a specific deterioration in output or real incomes, a global recession is typically defined by a prolonged and sustained drop in GDP. A global downturn is also typically accompanied by a contraction in investment, industrial production, and employment. It also often coincides with a decrease in international trade, which is caused by reduced demand for products and services.
During a recession, investors tend to reduce spending and shift their money into safer investments. This can slow the growth of the economy and cause businesses to reassess their long-term plans. In addition, increased uncertainty can make companies hesitant to invest or hire employees. In the past, a global recession has led to political unrest and civil disobedience.
According to a recent McKinsey survey, the factors that will most impact global business performance over the next few years include trade policy changes, geopolitical instability, and a potential economic slowdown. In particular, respondents in North America believe that political transitions and rising interest rates will have the biggest effect on their businesses.