Is The Recession Coming In 2023?

By Author: Logical nivesh
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Is the recession coming in 2023?
Market recession is not just limited to GDP and industrial production. It should also include factors like spending, jobs, and income. Simply said, focus on the three P’s – Pronounced, Pervasive and Persistent downturn in the broader measure of those factors.

Each of us has heard about the recession; many of you might have faced its shortcomings while growing up. But are you aware of what economic recession is and why there are signs of unease in the market during these times? With many companies laying off thousands of employees in a row, a stagnant hold on investment growth, and a sudden break on all the multi-million-dollar funding PR, the recession is coming! However, booms and busts are an integral part of the economy. Therefore, the recession is always ‘coming.’

What is economic recession?
In 1974, economist Julius Shiskin defined a thumb rule for recession, which says it is the two consecutive quarters of declining gross domestic product (GDP).

According to the National Bureau of Economic Research (NBER), a recession is “a significant decline ...
... in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

The Reserve Bank of India (RBI), the highest authority that defines the start and end of a recession, also said, “a recession is widely regarded as a period of prolonged decline in output experienced across much of the economy. To be more concrete, commentators often consider a recession to be in progress when total output (real gross domestic product) has declined for atleast two consecutive quarters.”

Market recession is not just limited to GDP and industrial production. It should also include factors like spending, jobs, and income. Simply said, focus on the three P’s – Pronounced, Pervasive and Persistent downturn in the broader measure of those factors.

Are we facing a market recession?
The World Bank downgraded India’s projected GDP for the current fiscal to 6.5 per cent. On hearing such projections, The International Monetary Fund (IMF) decreased the growth rate of India’s economic forecast for 2022 to 6.8 per cent in comparison to January’s projection of 8.2 per cent and July’s estimate of 7.4 per cent.

Pierre-Olivier Gourinchas, the IMF’s economic counsellor, said, “The worst is yet to come, and for many people, 2023 will feel like a recession.” As per IMF’s reports, the global economy has witnessed multiple blows; the upcoming year’s expected financial recession is the result of fatigue from the Covid-19 pandemic, the Russia-Ukraine war that drove up the food and energy prices, rise in interest rates, inflation and reputational risk.

How to survive a recession that is ongoing?
Surviving a recession has become a routine part of growing up. There are enough signs that highlight the arrival of recession, and once it comes, it takes up to months or years to go back. Below are some of the basic steps to be taken to survive an ongoing recession.

Be safe from risks – A recession is not the right time to take risks. Therefore, one should be cautious and aware of all the pros and cons before investing during a recession in any business venture.
Be tech-friendly – No matter how low the economy is, the technology sector will always grow. So, never be hesitant to learn new technology or invest in the right type.
Think and decide – Switching jobs during a recession needs the utmost thought. If you are working in a stable company, don’t consider quitting. However, if you are working in a company that might lose its relevance in the market recession, then consider opting for greener options.
Be ready to make hard decisions – No matter how hard a decision is, whether laying off at work, shifting to smaller apartments, or anything else, a recession calls for making tough decisions to fulfill your long-term goals.
Invest in yourself – Surviving a recession becomes easy if you learn to invest in the right type of infrastructure, technology, or people. Also, invest in yourself rightfully by filling your knowledge gaps to the core in the right manner.
Is it safe to invest during a recession?
Although recessions are risky, safe investing will make you grow even during a recession. Taking help from the right investment advisor will enhance your portfolio and ensure to have a risk-managed future. Our investment advisory company, Logical Nivesh, owned by Ashutosh Bhardwaj, SEBI certified research analyst, ensures to provide the best ways of investing during recession. Some of them are listed below –

Cash is the king – Selling premature investments to get cash in the anticipation of a recession might trap you as the markets rise. It is better to shift to well-positioned investments and keep a certain part of the portfolio in cash or highly liquid securities.
Defensive stocks are safe – Defensive stocks in the non-cyclical sectors, like utility stocks and consumer staples stocks, help protect your portfolio even in a recession. People often ask, “is economic recession coming?” and get tensed by it. However, companies that sell essential services and goods, such as shelter, food, electricity, etc., are non-cyclical and less exposed to economic ups and downs.
Buy quality assets – Avoid companies with high-debt loads and prefer quality asset classes to protect your portfolio during any recession. High ROI and low leverage are hallmarks of quality investments.
Prefer dividend stocks – Dividend stocks are the best helping hands for your portfolio during downturns. Even if the stock price falls, the company may keep paying dividends.
Actively managed funds – Surviving a recession can be easy if fund investors shift into more actively managed funds. As per research, most actively managed funds outperformed their peers by 4.5 per cent to 6.1 per cent in down markets after adjusting for risk and expenses.

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