The risk of a recession alerts the markets and consequently to companies and to the whole world. Currently the main financial indicators on Wall Street show falls for fear that the economy will go into decline. But what is the recession all regarding and what can be done?
Journalist Jonathan Ruíz Torre wrote in his column to The financial call watershed this monday that recession is a latent possibilitythis may be the fourth time it has happened so far in the millennium, following 2001, 2009 and 2020, each with their respective impacts.
According to different specialists, a recession occurs when the growth of the Gross Domestic Product (GDP) contracts for two consecutive quarters. GDP is an important indicator for world governments to make decisions, according to BBC.
It is also an indicator for central banks, which consider it together with inflation. to raise or lower your interest ratesand with this define the possible rise in prices in different products and services.
Finally, growth contraction seen by companieswho they can decide when it’s time to get out the scissors and ‘cut’ staff and invest less.
Jonathan Ruíz Torre mentions that a recession is similar to the game of snakes and ladderssince while some have huge losses, others make profits in the midst of the crisis, driven by the needs of the people at that time.
He gives the example of the 2009 crisis, driven by the fall in the real estate sector that led to the bankruptcy of many people and banks. At that time, the director of Cinépolis, Alejandro Ramírez, was sure that the recession was not going to ‘hit’ himsince he was confident that people who were going to stop going on vacation due to financial problems might support their entertainment needs with a trip to the movies.
For the 2020 recession the situation was probably not the same, because the situation of the COVID pandemic hIt said that entry to closed public spaces was prohibitedincluding cinemas, to avoid contagion.
So a recession can affect you in different waysdepending on the situation in which companies and governments find themselves.
What can people do in a recession?
Much is said regarding the movements of companies, banks and governments during a recessionbut,what can a person do in the face of possible economic downturn?
Consolidated Credit, a credit counseling company focused on financial education, points out that one of the best decisions people can make is pay off debts you owein order to eliminate invoices and everything that may affect income.
professionals recommend do what you can to pay off the debtmainly due to economic volatility and also due to the possibility that unemployment rates may increase due to company movements.
With information from the BBC.