20 words & phrases that defined 2020: Recession

SINGAPORE - The word recession, until very recently, was regarded by most as a piece of financial jargon.

But this year it became a topic of dining table conversation and may remain one of the terms that will define 2020 for a long time.

According to Google, the spike in Web searches for recession started to take shape in mid-February - just three weeks after China placed the capital of its industrial heartland, Wuhan, under quarantine and nearly a month before the World Health Organisation declared Covid-19 a pandemic.

For economists and policymakers it was clear that a sprawling lockdown in the world's second-largest economy would hurt global growth and hit its Asian neighbours the hardest.

Health experts dreaded the prospect of the disease spreading beyond China.

For common folk, the concerns over a pandemic-driven recession encompassed the threat both to their lives and their livelihoods.

Singapore on Feb 17 downgraded its economic outlook, hinting at the possibility of its first full-year recession in decades.

The forecast in March turned grimmer, suggesting that the nation may suffer its worst recession since independence.

Today, about 10 per cent of the global population may have been infected by the coronavirus.

But there is hardly anyone on the globe that has been spared the ripple effects of the economic downturn, and the chaotic adjustment to a previously unthinkable lifestyle and work environment triggered by the outbreak.

The International Labour Organisation's latest estimates show that 81 million jobs will be lost across the Asia-Pacific this year.

In Singapore, the unemployment rate stood at around 3.8 per cent in the third quarter.

The UN agency believes that the true extent of job and income loss was hard to measure during this particular recession as millions more were sent on unpaid leave of absence, salaries were cut and many more took temporary gigs.

Another usual method of counting the cost of a recession is by assessing the drop in business and private spending.

But given that the recession was triggered by the lockdown of businesses, curbs on travel and mobility restrictions, it became impossible to know how much of the withdrawal in consumption was caused by financial distress and how much was due to the fact that people and businesses could not make desired purchases even if they had the money to do so.

And that is why, even though there was nothing new about the word and the phenomenon itself, there was quite a bit of discussion on whether this particular downturn should be compared with previous recessions.

The word recession was first used in the 1640-1650 downturn called the General Crises that enveloped most of Western Europe amid a widespread breakdown in politics, economics and society.

In the following years, there was not much of a consensus on the characterisation of a recession.

In 1974, a commissioner of the US Bureau of Labour Statistics, Julius Shiskin, came up with a definition for recession that is prevalent to this day.

He defined it as two consecutive quarters of gross domestic product (GDP) declines.

The National Bureau of Economic Research (NBER) - a private, non-profit research group that tracks the start and end dates of business cycles in the United States - describes a recession as the period between a peak of economic activity and its subsequent trough.

According to the NBER, expansion is the normal state of the economy and most recessions are brief. That said, the time it takes for the economy to return to its previous trend path may be quite extended.

However, the 2020 recession did not really follow a peak in economic growth for Singapore.

The country's economy grew by 0.7 per cent in 2019, the slowest pace since 2009 when GDP expanded by 0.1 per cent.

There were plenty of other economies worldwide that suffered a similar fate.

Thus, some economists have insisted on calling the 2020 recession the Great Lockdown Crisis, while others named it a health emergency or health security crisis. Those descriptions give a sense that the recession is quite temporary and that a quick or V-shaped recovery is in the offing, helped by unprecedented injections of fiscal and monetary aid.

However, as described by the NBER, even as economies enter a period of expansion it may take more time to recover all that was lost - jobs, corporate profitability and stability of personal and national finances.

Singapore's Ministry of Trade and Industry expects a full recovery will stretch through 2021, even though growth may have already started to pick up.

And for those who suffered the most in terms of financial distress, the word recession will remain etched in their memories for even longer.