Surviving An Economic Recession

“I’d rather be lucky than good.” – Lefty Gomez, all-star baseball player for the Yankees

- Ong Xiang Hong

In early 2000, a five-year-old online bookseller called Amazon.com sold US$672 million in convertible bonds to shore up its financial position. One month later, the dot-com bubble burst. More than half of all digital start-ups went out of business over the next few years – including lots of Amazon’s then-rivals in e-commerce. Had the bubble burst just a few weeks earlier, one of the most successful companies ever might have fallen victim to that recession.

Predicting a recession isn’t easy. A recession is defined by two consecutive quarters of negative economic growth. It can be triggered by a multitude of factors: economic shocks (such as a spike in oil prices in 1973), financial panics (like the one that preceded the 2008 Great Recession), or just rapid changes in economic expectations (which John Maynard Keynes termed “animal spirits”), or some combination of the three.

However, the next recession on the horizon is painfully clear to see. The COVID-19 pandemic, which is rampaging across the globe – combined with an already-cooling global economy and the China-US trade war – is causing what many are calling the worst recession since 1929.