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I am bit curious to understand what it actually means when I read global recession is coming soon. There are some questions which pop in my mind reading such news. Some of them are:

  1. What causes global recession?
  2. How is it possible that all countries' economies go down at the same time. A loss in business for someone means profit for another. So how come all economies start going downward at the same time?
  3. Does it mean that people's consumption capacity has declined or does it mean that the production of goods has declined which is leading to fall in GDP growths of all countries? If its the later case how difficult it is pump up the production capacity for any country to improve the economy instead of stating that global recession has led their economy to go down.
  4. How does the world come out of global recession? If it has happened before many times in history, why haven't the major economies taken lessons from it and only do things which helped them to come out of recession last time?
  5. Last but not least, is there a bigger picture which I am missing that all this global recession can be a planned activity by major economies every few years/decades to achieve something bigger?
  • This is a very broad and complex topic. The major economies have learned lessons from it. – RonJohn Oct 16 '19 at 9:37
  • @RonJohn According to the IMF, there have been four global recessions since World War II, beginning in 1975, 1982, 1991 and 2009. Not sure what they learned from each of those recessions. Possibly every recession happened because of a completely new/different reason? – Mohit Sharma Oct 16 '19 at 9:43
  • 1975 and 1982 were probably due to greatly increased oil prices a few years earlier. I don't remember what triggered 1991, and the 2009 recession was (I think) triggered by the US recession. Quantitative Easing helped to speed up recovery from the 2009 Great Recession. – RonJohn Oct 16 '19 at 9:49
  • A time to see who is swimming naked when the tide recess? – mootmoot Oct 16 '19 at 11:45
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    Mohit, I'm sorry to close this question and I hope that you will visit again and look around to see the questions that might interest you, along with some great answers that can help you. This question is both "off topic" but also, far too broad to address here. – JTP - Apologise to Monica Oct 16 '19 at 13:03
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This is obviosly a very complex topic, but I can address some of your points.

How is it possible that all countries' economies go down at the same time. A loss in business for someone means profit for another. So how come all economies start going downward at the same time?

There are multiple assumptions in this point that are not necessarily true:

  • First of all, not all economies go down necessarily in a global recession. A global recession means that in total, the aggregate product of all world's economies declines. Some economies still might grow, but that might not be enough to offset the decline in other countries. For example, a recession in the US (a little less than a quarter of the global GDP) won't be offset by an expansion in a multiple smaller countries and in total, the global economy might contract.
  • "A loss in business for someone means profit for another." - This is not true, and in fact, a decline in a large country will affect other countries as well. In today's globalized world, where many economies rely largely on trade with other countries, their output might be affected by a recession abroad. For example, if the UK goes into recession following Brexit, many other European economies will suffer due to lower exports - that might lead to lower production, which leads to lower employment, which leads to lower consumption. This is obviously a simplification, but the point is, that economies are not isolated and they affect each other.

Does it mean that people's consumption capacity has declined or does it mean that the production of goods has declined which is leading to fall in GDP growths of all countries? If its the later case how difficult it is pump up the production capacity for any country to improve the economy instead of stating that global recession has led their economy to go down.

It could mean either of those things or a combination of them. There are multiple factors at play, and it's not always easy to see what leads to a recession. In the business cycle, during the peak, when unemployment is high, labor is expensive and wages start increasing, which in turn leads to an increase in unemployment. That then leads to lower consumption, defaults in debt. With lower consumption, you get lower production and cheaper labor. Then, during the trough of the business cycle, the reverse happens.

How does the world come out of global recession? If it has happened before many times in history, why haven't the major economies taken lessons from it and only do things which helped them to come out of recession last time?

When an economy contracts, the governments and central banks can attempt to stimulate their economy by fiscal and monetary policies. The common wisdom is that they should prepare for the inevitable bad times during the good times. Some disagree with the inevitability of the bad times (and there are cases of very long expansion periods - for example, Australia hasn't had a recession in almost three decades), but long expansion periods often lead to unsustainable debt levels (like mortgages in the Great Financial Crisis) which also lead to unsustainable business.

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