Global recession 2020

                                    To get to the risk of recession and its effect on the markets, we must look at the cause in question here. Many factors can induce a period of weak economic performance and a broad loss of confidence. These ranges a stock market crash to financial crisis or even deflation as seen causing the Great Depression in the 1930s.

The last two recession in the US had notably been brought about by very different reasons. In late 2007, the collapse of the housing bubble caused a credit crisis the spread across the global economy. A little further back in 2001, it had been the burst of the dot-com bubble. Coming back to 2020, the expectations for a slow growth year at the start of the year had certainly been replaced with views of global economic recession amid the unexpected Covid-19 hit.

                                    Q1 2020 had been a dreadful quarter for the global equity market as a result of the global pandemic. A by-product of a recession-inducing occurrence is also the general loss of market and business confidence. With Covid-19 having indiscriminately disrupted economic activities with mass social distancing restrictions, this general decline in economic activity had similarly seen to broad-based selling of risky assets.

                                    Recession, while painful, are nevertheless a natural occurrence in business cycles. With recognition that recovery typically ensues, helped also by supportive central banks and governments around the world, a V-shaped recovery seems to be the suggestion from the stock market in the immediate aftermath.

That said, lingering Covid-19 impact on the global economy persists with potential for cases to flare up again. This could further dampen economic activity leading to uneven recovery between economies and sectors, whereby market that can better weather the Covid-19 storm will likewise fare better.