Yesterday Spain entered economic recession after there communicated the Department of Economy and Treasury Department a contraction of the GDP of 1,5 % in the 4th trimester of the year, and for the second consecutive trimester of growing in negative. Nevertheless, the fact that takes as official is the one that the National Institute of Statistics publishes, that takes of the National accounting and that will meet soon. It is necessary to remember that in the third trimester the economy descended in 0,2 %, with what it registered his first descent from the year 1993.
But: what is an economic recession?
It is believed that a recession is a period of time in which the percentage of growth of the GDP of an economy is negative. Nevertheless, already it is considered to be an economic recession when the economic activity contracts or decreases during two or more consecutive trimesters.
Basically, everything begins with a decrease of the growth of the economy. The proper economic situation, and the fear of a harder future provokes that the consumption diminishes, and that with this reduction of the demand, the products that have the companies stay in inventories, increasing. The industrial sector begins to collapse this way, and to reduce the losses or the benefits decrease, the dismissal increases, raising the unemployment. In turn, the dismissals provoke that the fear increases and that wears out even less. The credits, at the same time, remain without paying and the slowness increases, at the same time that they diminish the credits, being able to come this way also to a financial collapse.
The global economic situation has been marking the steps clearly towards a general economic recession, although many shift politicians wanted to look at another side and only they dared to use the awesome word when there was already no reverse gear. Even now it is difficult to them to admit that they stay hard months ahead, giving forecasts that are much over those that independent companies are giving.
In spite of the continuous reviews that have being done from the Government, the current forecasts of the Department point at an annual growth of the GDP for 2008 of 1,6 % and of 1 % for 2009. Nevertheless, according to sources that probably are considered to be more realistic in accordance with the estimations of previous trimesters, like those of BBVA, which point at an annual growth in 2008 of 1,3 % and at a decrease of 1 % in 2009.
The symptoms that are used like indicators of a nearby recession are, therefore:
- Growth of the unemployment
- Decrease of the consumption
- Increase of the slowness
- Inventor increase in the companies
- Decrease of the GDP
And to end, two economic terms more that it is convenient to bear in mind: on the one hand, stagflation, which takes place when in epochs of recession there is also a growth of the inflation. And for other, the depression, situation that takes place when the recession gets longer for the long time.
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