The R Word - Are We Heading For A Recession?

There is one word out there that strikes fear in every business owner’s heart: recession.

- Ong Xiang Hong

When the economy slows, it seems like money also slows to a halt. Businesses don’t hire, wages grind to a halt, and no one seems to be giving out work. Families tighten their belt and companies go on an austerity drive—all to ‘wait for the good times to return’.

The current mood on the ground is not helping things either. If you go out and talk to the businessman on the street, anecdotally he will tell you about business becoming leaner, less customers are buying, and they are buying less. Talk is rife that a recession is coming, and it will be worse than 1981, 1997, 2001, or 2007—each year being worse than the last, or so they claim.

But this time, they could be right. The International Monetary Fund (IMF) estimates that global recessions occur over a cycle lasting between eight and ten years. Considering that the last great recession started in 2007 and ended in 2009, we are overdue for the next big one. The warning signs have already started: stagnating economic data, declining exports, and the ongoing US-China trade war. So, what are we going to do when the big one hits?

WARNING SIGNS

It’s been a decade since the Great Recession ended. For the American economy, 2019 will mark the longest period of economic expansion in its history. Along with China’s steady growth over the same period, the last 10 years have seen other nations’ economies buoyed by the flow of goods, services, and investment. Even Europe, which struggled to recover from the 2007 recession, found its footing for some modest growth numbers.

But like all good things, economic expansions must come to an end, sooner or later. The Chinese have a proverb, which says, “The moon waxes only to wane, and water surges only to overflow”. Analysts say the question is not whether there will be another recession, but when.