This document discusses recessions, including defining a recession as a general slowdown in economic activity, and listing some potential causes such as financial crises or trade shocks. It then outlines several impacts of recessions such as falling GDP, investment, income and rising unemployment. The document also discusses different shapes recessions can take (V, U, L, W) and sectors most affected by recessions like stock markets, IT, banking, real estate and automobiles. It provides examples of past global recessions and their causes.

1. PRESENTED BY
JACOB TOMS
9605744895

2. INTRODUCTION
•In economics, a recession is a business cycle
contraction.
•It is a general slowdown in economic activity.
•Recession loomed over United States
•Recessions generally occur when there is a
widespread drop in spending (an adverse
demand shock).

3. •This may be triggered by various events, such
as a financial crisis, an external trade shock
•Governments usually respond to recessions by
adopting expansionary macroeconomic
policies, such as increasing money supply,
increasing government spending and
decreasing taxation.
•Macroeconomic indicators such as GDP (gross
domestic product), investment spending,
capacity utilization, household income,
business profits, and inflation fall, while
bankruptcies and the unemployment rate rise.

4. •Investors spend less as they are fear stock
value will fall and thus stock market fall on
negative
•A recession has many attributes that can occur
simultaneously and includes declines in
component measures of economic activity
(GDP) such as consumption, investment,
government spending, and net export activity
•These summary measures reflect underlying
drivers such as employment levels and skills,
household savings rates, corporate investment
decisions, interest rates, demographics, and

5. •A severe (GDP down by 10%) or prolonged
(three or four years) recession is referred to as
an economic depression, although some argue
that their causes and cures can be different. As
an informal short hand, economists sometimes
refer to different recession shapes, such as V-
shaped, U-shaped, L-shaped and W-
shaped recessions.
•Consumer confidence is one measure used to
evaluate economic sentiment.

6. TYPE OF RECESSION OR SHAPE
•The type and shape of recessions are
distinctive.
•In the US, V-shaped, or short-and-sharp
contractions followed by rapid and sustained
recovery, occurred in 1954 and 1990–91 U-
shaped (prolonged slump) in 1974–75, and W-shaped,
or double-dip recessions in 1949 and 1980–82.

7. •Korea, Hong Kong and South-east Asia
experienced U-shaped recessions in 1997–98,
although Thailand’s eight consecutive quarters
of decline should be termed L-shaped
•Japan’s 1993–94 recession was U-shaped and
its 8-out-of-9 quarters of contraction in 1997–
99 can be described as L-shaped

8. PSYCHOLOGICAL ASPECTS
•Recessions have psychological and confidence
aspects.
•For example, if companies expect economic
activity to slow, they may reduce employment
levels and save money rather than invest. Such
expectations can create a self-reinforcing
downward cycle, bringing about or worsening a
recession

9. WHAT CAUSES RECESSION?
• Many factors contribute to an economy's fall into a
recession, but the major cause is inflation.
• Inflation refers to a general rise in the prices of goods
and services over a period of time.
• Inflation can happen for reasons as varied as
increased production costs, higher energy costs and
national debt.

10. • In an inflationary environment, people tend to cut out
leisure spending, reduce overall spending and begin
to save more.
• But as individuals and businesses curtail expenditures
in an effort to trim costs, this causes GDP to decline.
• Unemployment rates rise because companies lay off
workers to cut costs. It is these combined factors that
cause the economy to fall into a recession.
• This lead to a decreased demand for goods and
services
• Which in turn lead to a decrease in production

11. IMPACT OF RECESSION IN INDIA
• 1. Reduced liquidity in the Indian economy
2. Reduced industrial output
3. Reduced job opportunities
4. Stock Market is lingering in the bottom
5. Real estate market has started to take a beating
6. Inflation has increased
7. GDP has come down and the GPD forecast for the
next two quarters are only average.
8. Change in consumer behaviors and purchasing
power.

12. CAUSES OF RECESSION
• Currency Crisis
• Energy Crisis
• War
• Under Consumption
• Over Production
• Price Of Fuels

13. GLOBAL RECESSION

14. Recessio
n Name
Recessio
n Year
Time
Take
n
Cause & Impact
Great
Depressi
on
1921-
1931
10
years
Stock markets crashed worldwide and a
banking collapse took place in the U.S
This sparked a global downturn,
including a second more minor recession
in the U.S, The Recession of 1937
1937 Oil
Recessio
n
1973-
1975
2
years
A quadrupling of oil prices by OPEC
coupled with high Government spending
due to the Vietnam war lead to
stagflation in the U.S
Early
1980’s
Recessio
n
1980-
1982
2
years
The Indian Revolution sharply increased
the price of oil around the world in
1979, causing the 1979 energy crisis.

15. Recession
Name
Recession Year Time Taken Cause &
Impact
Early 1990’s
Recession
1990-1991 1 year Industrial
Production and
Manufacturing
trade sales
decreased in
early 1991
Early 2008’s
Recession
2008- 2013 5 year The collapse of
U.S economy
and other
related
countries

16. AFFECTS OF RECESSION ON INDIAN BUSINESS
• The sectors least affected directly by the slowdown are
Pharmaceuticals , Oil and Gas, FMCG, Media &
Entertainment
• Those which feel a moderate impact of the global
crisis are Power, Automobiles, Retail, Hospitality and
Tourism
• The sectors most severely affected are Banks,
Financial Services, Real Estate, Infrastructure and

17. MAJOR SECTORS AFFECTED BY
RECESSION
• Indian Stock Market
• IT and BPO
• Banking
• Real Estate
• Aviation
• Textile
• Automobile
• Hospitality

18. EFFECT OF RECESSION ON DIFFERENT
SECTORS OF THE COUNTRY
#SHARE MARKET
•Most people have sold the shares
•Foreign investors have pulled out from
stock market
•The Indian stock market also crashed due
to the slowdown in the U.S economy
•People choose saving money rather than
investing them in stock market

19. #INFORMATION TECHNOLOGY INDUSTRY
•Recruitment by IT Companies at IIT Kanpur
has gone down from 130 students in 2007
and 72 in 2008
•IT Companies are predicted a drop in 15%
in growth from 30% in BPO Sector
•India’s outsourcing industry slowed down

20. #REAL ESTATE SECTOR
•One of the casualties during this time was
real estate, building projects were half
done all over the countries and in this tight
liquidity developers find it difficult to raise
finance
•The demand for houses had reduced
significantly and the property price across
India has registered 15-20% fall

21. #INDUSTRIAL SECTOR
•Govt and other private companies are reluctant in
starting new ventures and starting new projects
•Project were half way to complete or companies
got stuck with cash flow were
unable to reach beak even, and were running
out of cash
•As very less new production were taking place
this lead to loss of export details and created
unemployment

22. #BANKING SECTOR
•As companies were in loss many banks suffered
crisis in recovering loans which in turn had an
adverse effect on economy and also created
liquidity crunch
•Central banks have worked to improve liquidity
but were charging higher credit. The interest
rates have drastically increased from 11.5% to
nearly about 16%
•Banks act as important players in the financial

23. AUTOMOBILE INDUSTRY
•India is the world’s largest two wheeler
manufacturer.
•India is the world’s second largest tractor
manufacturer.
•India has the fourth largest car market in Asia.
•India has the world’s largest three wheeler
market.

24. EFFECT ON AUTOMOBILE INDUSTRY
•TATA MOTORS
•MARUTI SUZUKI
•MAHINDRA &MAHINDRA

25. EFFECT OF RECESSION
• Uncertain exchange rate and a sudden increase in
dollar value against Indian Rupee
• Delayed Payments from the OEMs (Original Equipment
Manufacturer)
• Alloy and Steel prices have also not shown any
reduction in their prices

26. EXPORT
•Due to decreasing $ rate against Indian
rupees exporters were earning less
•The exporters increase their prices so as to
receive the same income in rupees as they
did before, the demand of their
commodities felt and lead to greater
losses.
•This lead to an adverse effect on India’s

27. IMPORT
•India imports generally Petroleum
products, capital goods, fertilizers,
chemicals, pulp and uncut stones.
•The importers in the case of a stronger
rupee now had to pay more for the same
commodity as the exporters increased the
price for the same .
•Thus it also lead to hike in price and fall in

28. CORRECTIVE STEPS TAKEN TO CHECK
RECESSION
• RBI needed to neutralize the outflow of FII money by
unwinding the market
• In the IT sector, there should be correction in salary
offerings rather than job cutting.
• Public should spend wisely and save more.
• Taxes include excise duty and custom duty should be
reduced to lighten the adverse effect of economic
crunch on various industries
• In real estate the builders should drop prices, so as to

29. CURRENT ECONOMIC SCENARIO -
IMPACT OF RECESSION IN INDIA
• Recession has grabbed almost all the organization of the world.
• Several people have lost jobs – facing financial problems.
• Government – doing best to come out of the problem.
• Banks are providing business loans at low rate.
• Government – providing money packages to organizations.
• Organizations are cutting cost to stand in the market.
• RBI has decreased the rate of interest.
• The real estate was doing good business
• But now a days the condition of real estate is still worse
because of the recession

30. THANKS