Question

Is the World heading for a recession? Explain the conditions under which the world can be classified as being in a recession as COVID-19 persists. Explain linking the pandemic to the various stages of a recession.

Answer 1

World is heading for a recession as economy is declining and trade and industrial activities are reduced during covid19 which adversely affected the country's GDP.

World can be classified in recession as covid19 persists under following conditions:

1. Job loss: Job loss is a very first stage of recession. As Covid19 persists, many companies started laying off employees as companies are earning low profit.
2. Falling production: Production is reduced because of low availability of inventory and manpower required for production as many people has fallen sick due to covid19 which results in low transportation of inventory and reduced manpower.
3. Low demand: As people income are reduced with the adverse effect of covid19, people are demanding and consuming less due to low income.
4. Peak production: World is heading towards recession as countries might face with its peak production with low demand, low movement of goods, after which the production will start declining due to low movement of necessary inventory and low work force.

All the above factors highlights that world is heading towards recession due to adverse effects of covid19 and countries GDP growth are reduced.