Udayavni Special

What is technical recession and how long will it last?


Team Udayavani, Nov 14, 2020, 1:58 PM IST

According to RBI, India has technically entered into a recession with a likely contraction in its GDP during the July-September period. In simpler words, a technical recession is two quarters in a row of economic contraction.

When the GDP contracts from one quarter to another, the economy is said to be in a recessionary phase.

Gross domestic product contracted 8.6% in the quarter ended September, the Reserve Bank of India showed in its first ever published ‘nowcast,’ which is an estimate based on high-frequency data. The economy had slumped about 24% in April to June.

According to Indian Express, India’s technical recession was not unexpected, given the nature of the problem-pandemic. In fact, As soon as the lockdown was announced in March, most economists expected the Indian economy to go into recession.

A “technical recession” is when you have 2 negative quarters of GDP, but it is due mainly to slowing growth or an isolated event rather than a major underlying cause.

Technical recessions are usually short in duration and mild in severity. If they continue for years, they are referred to as “depressions” and they are quite rare

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