consecutive quarters of negative GDP growth signals that an economy is in recession.
2. Is it the same as a slow down?
Absolutely not. A slowdown means that growth is still happening, but at a slower pace than before. For example, if say India was growing at 9 % pa for the past few quarters then a growth rate of say 5 % for the current quarter is a slodown, but not a recession.
3. Is a recession a normal occurrence?
According to the traditional theory of business cycles, a recession is a part of a business cycle. Clement Juglar's 8 to 11 year cycles had periods of expansion, crisis, recession and recovery. But these theories have been disputed. Even the concept of business cycles has been questioned.
4. Can we know in advance about a recession?
Unfortunately not. While predictions can be made, you do not know when a recession starts, because, by definition itself, you need two quarters at least of negative GDP growth. Given that these figures are corrected after they are announced, it si quite possible that an economy is in an out of a recession even before it is formally stated.
5. Does a recession mean that all companies are badly affected?
No. A recession is an overall measure of an economy - a country. Within it, different sectors an companies could be impacted differently. Some could actually do well during this period.
6. What is a depression?
A depression is a long and sustained period of recession.
7. Is India in a recession?
No. The Indian economy is facing a slow down and not a recession.
8. What causes a recession?
Many different things can lead to a recession. The events of 9/11 led to one in many countries. The series of recessions in Japan from 1989 was a result of the asset price bubble   when high stock prices and high land prices collapsed.
9. What are the aftereffects of a recession?
That again depends on a number of factors including cultural ones. Japan for example never fully recovered. The manufacturing might was lost to Korea and China amongst others. In the US after the great depression of the 60's saw a period of reconstruction and innovation that redoubled its position as a super power.
10. Which countries are currently in recession?
OECD's latest economic projections for US, Japan and Euro area starts off ominously enough "The OECD area economy appears to have entered recession, and unemployment is now rising in many OECD countries. OECD projections point to a protracted downturn, with GDP likely to decline by a 1/3 of a percent in 2009, but the uncertainties are large"
11. How can I best ride through a slowdown?
Read the cover story of our November issue for tips :)