Narration pertaining to the possible 2020 global recession has been spreading for quite some period, followed by the possible causes. As many analysts said, the recession is not an overnight phenomenon for it requires time and a series of other phenomena to take effect.
In short, in Economics, a recession is a general decline plaguing an economic activity. What qualifies as a recession is that if there are two or more consecutive quarters of negative economic growth. In the long run, even continuous recessions can incapacitate economic activities.
In the current period, many economists and business owners are anxious about the global recession. The phenomenon is not simply the accumulation of what happens to develop or developed countries, but this includes numerous countries around the globe.
Experts have discovered indications of the phenomenon. For instance, Oxford Economics released a report that Southeast Asian countries are experiencing slowing GDP growth this year, and it will continue. Also, long-term-interest rates have fallen since this year’s July.
Regarding the matter, the United Nations issued warnings of the upcoming, possible recession in 2020. UN also stated that 2019 is the year where the expansion is the weakest in the decade for various reasons, one is due to trade wars.
The Causes of 2020 Global Recession
Many factors might contribute to the emergence of a recession. As for the 2020 global recession, many global phenomena have been supporting the drive to the recession.
First and foremost, the existence of numerous trade wars is influential enough to spark a recession. A trade war inflicts jeopardy to the ongoing trades in a manner of hindering the flow of trades with bans, policies, and lofty tariffs. US-China trade war is a good instance of the phenomenon.
The immense trade war between the world’s biggest economic countries has been significantly contributing to the global economic slowdown. It disallows the previously free-flow trade between the two countries and, subsequently, harms them both. The harm, however, also affects the trade partners of the foregoing countries.
Besides the trade war against China, the US also prospectively has another trade war with the European Union. The threat is real and adding to the anxiety of the recession. As a consequence, many people are criticizing Trump for being irresponsible with his policies. This is debatable as the US is the world’s biggest economy, making its acts influential to other countries.
However, Trump administration is not the only responsible party who is to blame for the recession. Other factors, such as currency gyrations and Brexit, play a crucial role as well, the UN says.