#oeconomicus_english by the @econoscopejrnl

Can you predict future crises? (Part 1)

First, let’s consider what a crisis is according to the Oxford dictionary.
A crisis is a time of great danger, difficulty or doubt when problems must be solved or important decisions must be made. So, is an economic recession simply a time period when most economic markers decline?

🏦 The World Bank defines a global recession as a reduction in the income of the average person on the planet and a simultaneous downturn in several major economies.

🏢 The International Monetary Fund (IMF) defines a recession as a significant and prolonged decline in business activity, such as a fall in GDP, a rise in unemployment, and a decrease in production and retail sales.

🇺🇸 The US National Bureau of Economic Research (NBER) emphasizes that a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months. They use three measures: the expenditure-side and income-side estimates of real gross domestic product (GDP) and gross domestic income (GDI), as well as payroll employment.

🇪🇺 The Euro Area Business Cycle Dating Committee (EABCDC) does not use the technical recession criterion (two consecutive quarters of GDP decline) to determine whether a crisis exists. A recession is understood as a significant decline in economic activity that has spread across the entire economy of the eurozone.

🇷🇺 What about Russia?
There are three key groups of institutions that record and comment on economic downturns in Russia.
• The first is the Federal State Statistics Service (Rosstat), which calculates GDP dynamics.
• The second group includes the government and the Bank of Russia, which analyse the data provided by Rosstat. On the government side, the situation is officially assessed by the Ministry of Economic Development (MED). At the same time, the Central Bank publishes analytical reports and macroeconomic forecasts.
• The third group consists of academic institutions, such as Centre for Macroeconomic Analysis and Short-Term Forecasting (CMASF), universities, and major analytical departments of banks.

To sum up, different countries and institutions define a recession differently because there is no universal definition, which makes predicting crises even harder.

✍️ Written by Barkov Mark (2-IER)