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4 countries going through recession in 2024

Economic recession is a challenging phase for any nation, impacting livelihoods, businesses, and overall prosperity. Several factors contribute to a country slipping into recession, including economic policies, global market trends, and internal socio-political dynamics.

Here, we’ll explore four countries currently experiencing economic recession, shedding light on the causes and potential implications.

1. Ireland

Ireland is in a recession, with its economy shrinking by 0.7% in the last quarter of 2023 according to the Irish Times. This decline is mainly because the reliance on multinational-dominated sectors exposes Ireland to external shocks, making its economy susceptible to fluctuations in global markets and international trade dynamics. The economy has been getting smaller for five quarters in a row, showing deeper problems. Ireland is closely connected to the European Union and depends a lot on selling things to other countries, especially in areas like making medicine and technology. The COVID-19 pandemic and all the complicated issues related to Brexit have made Ireland’s economic problems even worse.

2. Finland

Finland’s economy contracted by 0.4% in Q4 2023, marking the second consecutive decline. Year-on-year, GDP fell by 1.3%, with a 0.5% shrinkage for the full year. Weak consumption, high-interest expenses, and subdued market rates drive the recession. Declining home sales, especially in new builds, and hesitant property investors worsen the situation. Rising unemployment, notably in construction, adds strain. Sluggish consumption and housing market activity hinder economic recovery. High-interest expenses may further dampen spending. Anticipated interest rate reductions could aid recovery in late 2024, but uncertainties persist.

3. Japan

Japan unexpectedly fell into recession at the end of last year due to several factors. The third-largest economy globally, faced a 0.8% contraction in the second quarter (Q2), followed by a more modest decline of 0.1% in the third quarter (Q3) of 2024. High inflation, a weak yen, and rising food prices burdened businesses and consumers, leading to reduced spending. Despite record corporate profits and a thriving stock market, consumer spending and business investment lag due to stagnant wages. This economic polarisation worsens the downturn. Concerns about low wage growth threaten consumer spending sustainability and overall economic expansion. The Bank of Japan faces a dilemma in adjusting interest rates to stimulate growth amidst recessionary pressures. Addressing inflation, consumer behaviour, and promoting wage growth are vital for Japan’s recovery and sustained growth.

4. United Kingdom

The United Kingdom has entered a technical recession with two consecutive quarters of negative economic growth. The Office for National Statistics reported a 0.3% GDP contraction in the final quarter of 2023, fulfilling the recession criteria. This exacerbates existing economic challenges, hindering sustainable growth efforts. Following the GDP release, sterling weakened against major currencies, potentially impacting trade and investment. The recession poses political challenges for Prime Minister Rishi Sunak ahead of the anticipated 2024 national election. The Bank of England expects a slight economic pickup in 2024 but may consider policy adjustments to support growth amidst prolonged weakness.

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