Economists differ over the definition, but a recession is commonly regarded as two consecutive quarters of negative growth. Given the lack of reliable data, no-one could ever identify with certainty the longest recession in history, but there have been some notable examples.
Perhaps the longest slump in history was the Long Depression of the 1870s, which at the time was called the Great Depression until the other one came along 60 years later.
It brought down the US bank Jay Cooke & Company and was sparked by a financial panic in Europe.
The US National Bureau of Economic Research estimates that the US economy was contracting for 65 months, from October 1873 to March 1879, 22 months longer than the Great Depression of the 1930s.
The Great Depression of the 1930’s in the US has been a common reference point for commentators discussing any crisis that followed, including the financial crisis of 2007/2008.
The US Bureau of Economic Analysis only began collecting GDP data in 1930, the year after the Wall Street Crash, and it says the US economy contracted for four consecutive years. Its GDP fell by nearly a third.
It was also a double dip because it went back into recession in 1937-38. So it recovered strongly but went back into recession.
However, for many, the recession being experienced by Greece since 2008 eclipses any previous economic downturn.
According to the Greek government's own figures, the economy first contracted in the final quarter of 2008 and, apart from the odd quarter of weak growth, has been shrinking since.
This puts it in its ninth year of recession, although if you interpret the odd spurt of growth as the end of a recession, Greece has emerged from recession more than once and gone straight back in. The World Bank says the country had its first full year of recession in 2008.
Apart from a brief respite in 2014, the Greek economy has been steadily contracting since 2008 as the country’s creditors as well as the European Union and the IMF imposed harsh austerity measures accompanying successive bailouts.
Falling salaries and pensions combined with tax hikes have had a devastating impact on demand, particularly consumer spending.
Greece is once again caught between the interests of its lenders and its own citizens. As part of a 2015 rescue package, Greece must meet strict fiscal targets to unlock more financial aid and keep the International Monetary Fund, an important creditor, involved.
The IMF says the country won’t meet those targets, touching off yet another global debate over the fate of Greece, the future of the euro area and the viability of the single currency. Maybe the Great Greek recession has not yet expired.
Disclaimer:
This article was issued by Antoine Briffa, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.