From Latin recess, recession is the action and effect of withdrawing or retreating (depart, separate, go back). The term is very frequent in the field of economy to mention the depression of economic activities .
The recessive period can affect a country, a region or even the entire world. The recession is usually considered to appear when the Gross Domestic Product (GDP) descends at least two consecutive semesters.
The recession usually involves the fall of the consumption and of the production of goods and services . The investment it also recedes while the unemployment increases The downward spiral of economic activity exhibits interrelated phenomena: as consumption falls, production falls; companies, therefore, lay off workers and increase unemployment.
At this time, the economic crisis that has ravaged the world in general has brought many countries to experience a notable recession, as would be the case in Greece, Italy, Portugal or Spain. Nations all of them that have had to suffer all kinds of cuts, tax increases and even suppression of certain public services by their governments.
All this has resulted in loss of economic capacity by citizens, a significant increase in the number of people without work, really delicate situations of entire families without enough money to be able to survive and maintain basic services for their homes such as electricity, water , the gas…
There are many causes that can lead to a deep process of economic recession in any country. However, experts in the field agree that the most frequent are the political and economic corruption carried out by the leaders and main visible heads of entities and administrations, overproduction or the null existence of innovation.
In the same way, it should not be overlooked that other phenomena such as the one that does not exist or appear new capital or that significantly reduce what would be consumption can also result in a recession of this type since there is no demand for certain products or goods.
Causes all those cited that can be seen in the previous countries that we have commented that are living a very complicated time.
Typically, the recession occurs gradually and can be anticipated from monitoring economic indexes. When the recession occurs abruptly, a crisis and may include bankruptcy of companies, default, etc.
The system of capitalism contemplate the recession as one of the phases inherent in the economic cycle . It is a downward phase, with cuts in investment, production, spending and employment. The lowest point of this phase is called depression . Then comes the turn of the reactivation , which is already an ascending phase with capital renewal. The highest moment of the business cycle is the boom that, when reaching a certain level of rigidity, begins to yield to give way again to the recession.
