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Countries To Face Recession In 2024

recession in 2024
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The world has been in bad shape since the pandemic in 2020. The whole world has been hoping for a stable and growing economy every year since then. However, the global economy is expected to slow down in 2024 due to the COVID-19 pandemic and the Ukraine war, which disrupted supply chains and commodity prices. The IMF predicts a 2.9% recession in 2024 despite the global economy’s resilience from the pandemic, Ukraine war, and cost-of-living crisis.

What Is A Recession?

A recession is a significant, widespread, and prolonged economic downturn, often defined by two consecutive quarters of negative GDP growth. The National Bureau of Economic Research (NBER) measures recessions using nonfarm payrolls, industrial production, and retail sales. However, there is no fixed rule for which measures contribute information or how they are weighted in decisions.

Understanding Recession

Since the Industrial Revolution, economies have grown steadily, but recessions are still common. Recessions can become self-perpetuating, with declining consumer demand and bear markets causing further weakening. Governments have adopted fiscal and monetary policies to prevent recessions from worsening, including automatic measures like unemployment insurance and specific actions like cutting interest rates.

Recessions are often identified after they’re over, but investors, economists, and employees may have different experiences. Investors may perceive a recession when investment losses accumulate, while workers may have to bear the brunt of a recession even after economic activity recovers.

What Predicts Recession?

An inverted yield curve has preceded each of the 10 U.S. recessions since 1955, but not every period is followed by a recession. When the yield curve is normal, short-term yields are lower than long-term yields due to longer-term debt’s duration risk. If yields on longer-dated bonds decrease, the curve inverts, potentially tipping the economy into a recession. 

Investors also use leading indicators like the ISM Purchasing Managers Index, Conference Board Leading Economic Index, and OECD Composite Leading Indicator.

What Causes Recession?

Economic theories explain recessions by focusing on economic, financial, psychological, or a combination of these factors. Financial factors, such as credit growth and financial risks, can cause recessions. Psychological factors, such as over-exuberance and pessimism, can also contribute to recessions. Keynesian economics, for example, combines these theories to explain bull-market euphoria and unsustainable speculation.

Global Economic Overview

The 2024 World Economic Situation and Prospects report highlights global economic challenges, including geopolitical tensions, extreme weather events, and tight financial conditions, threatening progress towards the Sustainable Development Goals and global trade and industrial production.

The key indicators that affect the global economic climate:

1. Gross Domestic Product (GDP)

The report predicts a slowdown in global GDP growth, particularly in developing economies, due to the ongoing pandemic and high debt and investment deficits.

The US economy is predicted to experience a drop in GDP growth from 2.5% in 2023 to 1.4% in 2024, driven by weak consumer spending and high interest rates. China is expected to experience a moderate slowdown, while Europe and Japan face significant economic headwinds. Developing countries like Africa are projected to witness a slight economic increase but may still fall short of the Sustainable Development Goals target.

2. Regional GDP Growth Forecasts

  • US Economy: Expected to slow from 2.5% in 2023 to 1.4% in 2024 due to falling household savings, high interest rates, and a softening labour market.
  • European Union: GDP is projected to grow by 1.2% in 2024, driven by consumer spending.
  • Commonwealth of Independent States (CIS): Economic growth exceeded projections, with growth in Russia, Ukraine, Caucasus, and Central Asia.
  • China: Economic recovery is expected to moderate to 4.7% in 2024.
  • South Asia: Growth is projected to increase by 5.2% in 2024, driven by India’s robust expansion.
  • India: The economy is projected to grow by 6.2% in 2024.
  • Africa: The economy is projected to increase from 3.3% in 2023 to 3.5% in 2024.
  • East Asia: Moderate slowdown expected, with growth declining from 4.9% in 2023 to 4.6% in 2024.
  • Latin America and the Caribbean: GDP growth is expected to slow from 2.2% in 2023 to 1.6% in 2024.

3. Unemployment Rates (labour market)

The global labour market has seen divergent trends post-pandemic, with developed countries experiencing a robust recovery with low unemployment rates and rising nominal wages. However, actual income losses and labour shortages remain challenges. Developing countries, like China, Brazil, Türkiye, and Russia, report mixed progress, with issues like informal employment, gender gaps, and high youth unemployment persisting. The decline in female labour force participation and high NEET rate among youth highlight gender equality and youth employment challenges.

The rapid adoption of AI, such as ChatGPT, is feared to exacerbate income inequalities and gender gaps and reduce demand for low-skilled jobs. Women who dominate clerical work are at higher risk of job displacement by AI.

4. Inflation Rates

Global inflation is easing, with headline inflation falling from 8.1% in 2022 to 5.7% in 2023, but food price inflation worsens food insecurity and poverty, particularly in developing countries.

5. International Finance and Debt

Developing countries face high external debt and rising interest rates, making access to international capital markets difficult. Debt sustainability is a critical challenge due to increasing debt levels and global financial conditions. Central banks tightening monetary policies have escalated debt servicing costs, prompting debt restructuring and relief efforts.

Also Read – What Caused The Great Depression Of 1929? – Know Facts, Effects And Solution

6. Investment

The report highlights global investment trends, with a slowdown in growth across both developed and developing economies. Developed countries invest in sustainable sectors while developing countries face capital flight and reduced foreign direct investment. Geopolitical tensions and economic uncertainties impact investment.

7. Trade

Global trade growth declined to 0.6% in 2023 and is expected to recover to 2.4% in 2024. Consumer spending shifts, geopolitical tensions, supply chain disruptions, and pandemic effects hinder trade. Protectionist policies in some countries have reevaluated global supply chains, impacting developing economies. Diversifying trade partners and strengthening regional agreements is crucial.

8. Climate Change

2023’s extreme weather events, including the hottest summer since 1880, caused devastating wildfires, floods, and droughts, causing economic damage. Climate change could lead to significant losses, with estimates suggesting a 10% GDP reduction by 2100 and 23% lower incomes without mitigation.

Other Factors Contributing To Recession in 2024

Other factors contributing to the Recession are Geopolitical tensions, Pandemic Aftermath, and Monetary Policy Decisions.

The US Fed is expected to begin cutting rates in April, despite slower economic growth and inflation closer to the Federal Reserve’s 2% target. The economy grew 5.2% in the July-September quarter, the fastest since 2021. The monetary cycle is expected to continue until 2025-end, with the Fed potentially reducing interest rates by 2.5% over the next 18-24 months. Other central banks may follow suit.

Also Read – Manmohan Singh As An Economist – His Life History, Best Decisions And Current Position

The Ukraine war, West Asian tensions, and US-China rivalry have significantly impacted the global economy, potentially fragmenting trade, hampering supply chains, and increasing commodity prices. These tensions are expected to persist into 2024, potentially causing oil market volatility or further economic fragmentation. The US-China trade war could further de-globalize the world. Any drastic action in the Taiwan Strait could impact the semiconductor industry.

Slower economic growth raises fears of a prolonged recession in 2024. The US is expected to skip the recession, but some argue that rising unemployment could impact consumer spending. The Euro Zone is unlikely to recover, with factory output declining for over 18 months. The IMF anticipates a slight recovery, but balancing curbing inflation and fueling growth is crucial. The UK is on the cusp of a recession, with zero growth expected this year.

The World Bank predicts a 39% rise in debt servicing costs for the 24 poorest countries this year, with a $3.5 trillion debt burden. These countries, often called ‘frontier markets’, will have to repay $200 billion in 2024, forcing them to choose between servicing public debts and investing in public health, education, and infrastructure.

Also Read – Russia-Ukrainian War And the main reason behind conflict

Over half of humanity, including 40 countries representing half of the world’s GDP, will vote in major elections this year. India, the US, and the UK are among the major candidates, with India set to become the third-biggest economy. Political changes could impact global trade, particularly with China.

Economists predict an economic recession in 2024 due to the closeness of the general election between President Biden and former President Trump. The potential for social unrest and violence could impact stock and bond markets, potentially leading to a recession. Additionally, concerns about the risk of a government shutdown, which was averted this year, could further impact the economy.


The year ahead is expected to be mixed with mediocre economic performance and little growth. Inflation has cooled, leading to central bank interest rate cuts. However, 2024 may not be a banner year for macroeconomics and we might witness a recession in 2024.

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