Dealing with recession

WHILE there is no single definition of recession, it is generally defined as a significant decline in economic activity that lasts for months or even years. Most experts declare a recession when a nation’s economy experiences negative GDP, rising levels of unemployment, falling retail sales, and contracting measures of income and manufacturing for an extended period of time. In Pakistan’s case, the dangerously fragile currency, high-risk premium in international financial markets, a high debt burden and the recent shock of the devastating floods add to our sad story of economic downturn. Expensive imports and a softening in global demand for exports as well as China’s slowdown will add further pressure on Pakistan and the region. Prima facie, all of these negative economic indicators point towards a looming recession in Pakistan. The global economic outlook is also looking grim. Since the beginning of the year, a rapid deterioration of growth prospects coupled with rising inflation and tightening financing conditions, has ignited a debate about the possibility of a global recession in 2023.