Exchange Rate FAQs

What is a Recession?

A recession is a period of slow economic growth or a complete reverse. There are signs indicating a recession is imminent such as falls in employment, investment spending, disposable incomes, business profits and GDP.

They occur when there is a drop in spending, often following a period of unsustainable periods of economic growth or a crisis. The last recession was a direct result of unsustainable borrowing and debt. Recessions are defined by two consecutive months of negative growth in a countries GDP.

Governments often respond to Recessions by using a variety of policies. They will take measures to increase the supply of money in the system, cut taxes to encourage spending and increase spending on large projects e.g. (roads, building schemes.)

A prolonged recession of several months is called an economic depression and is what was witnessed across Europe in 2008 and 2009.

Periods when global economic growth is less than 3% is called a global recession and is a term used by the International monetary fund (IMF).