Prajna Capital - An Investment Guide

A RECESSION can be loosely defined as a slowing down of the activity in an economy or when the economy enters a phase of negative growth . Since the GDP is a measure of the economic growth of the economy, a technical definition of recession would be a decline in the GDP growth of a country over two or more consecutive quarters of a year. This is very often accompanied by a fall in the stock markets. Many experts feel that a recession is a part of a normal business cycle after a period of growth and feel that it could last anywhere between 6-18 months. During a recession, there is generally a lowering of interest rates in order to pump liquidity back into the economy. The line between where recession ends and depression begins is often debated. However, most experts feel that when the GDP has fallen by over 10%, then it can be defined as an economic depression. There are, however, many who feel that GDP is not the only indicator and hence they look upon employment, industrial prod...