Sustained decline in economic activity, conventionally defined as two consecutive quarters of negative GDP growth.
A recession is a sustained decline in economic activity. The most-cited definition: two consecutive quarters of negative real GDP growth. More rigorous definitions consider employment, industrial production, retail sales, and income alongside GDP.
In the US, the National Bureau of Economic Research (NBER) officially dates recessions retrospectively. In Singapore, MTI declares technical recessions based on quarterly GDP figures.
2008 – 2009: Global Financial Crisis. SG GDP contracted 0.8% in 2009; unemployment spiked.
2020: COVID-19 recession. SG GDP fell 5.4% — the deepest single-year contraction since independence.
2023 (mini-recession): SG technical recession in early 2023 amid global goods-sector slowdown. Brief and shallow.
Inverted yield curve: short-term rates exceeding long-term rates historically precedes recessions by 6 – 18 months.
Rising unemployment: a sustained increase in the unemployment rate is one of the most reliable recession signals.
Sharp decline in consumer spending or business investment.
Manufacturing PMI below 50 for sustained periods.
Note: none of these are perfect; false positives happen. The 2022 inverted curve preceded a shallow 2023 recession in SG but didn't trigger a US recession.
Job risk rises: industries vary, but layoffs typically pick up 6 – 12 months into a recession. A larger emergency fund (6 – 9 months) is prudent before the storm.
Asset prices fall: equities typically decline 20% – 40% during recessions. Bonds often outperform, sometimes by a lot.
Don't panic-sell: recessions end. The 2008 – 2009 GFC was followed by an 11-year bull. The 2020 COVID crash was followed by 100%+ recoveries within 18 months.
Look for opportunities: recession is when assets are on sale. DCA continues; you may even want to over-weight if you have cash and confidence.
Avoid leverage: margin loans, second-property leverage, and stretched mortgages compound during recessions. Reduce leverage before the cycle peaks.
A sustained decline in economic activity, conventionally defined as two consecutive quarters of negative real GDP growth. More rigorous definitions look at employment, industrial production, and retail sales alongside GDP. The US NBER officially dates recessions retrospectively.
Inverted yield curve (short rates above long rates) historically precedes recessions by 6 – 18 months. Rising unemployment is one of the most reliable signals. Sharp drops in consumer spending and PMI below 50 for sustained periods also flag risk.
Build a larger emergency fund (6 – 9 months of expenses). Reduce leverage (margin loans, stretched mortgages). Don't panic-sell long-term investments. Look for buying opportunities in beaten-down quality assets. Don't try to time the bottom — DCA through it instead.
Average 6 – 18 months. 2008 GFC was 18 months in the US. 2020 COVID recession was 2 months (shortest on record). 2023 Singapore technical recession was brief and shallow. Recessions end; bull markets follow. The 2009 – 2020 US bull began at the depth of the GFC.