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The concept of ‘recession’ in the USA and Euro Zone is quite precise and technical—‘two consecutive quarters of falling GDP’—is how it is defined in these economies. And the idea of the ‘double-dip recession’ is an extension of it.
A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession—the GDP growth sliding back to negative after a quarter or two of positive growth. The causes for such a recession vary but often include a slowdown in the demand for goods and services because of layoffs and spending cutbacks done in the previous downturn. A double-dip (which may be even ‘triple-dip’) is a worst-case scenario—fear/speculation of it moves the economy into a deeper and longer recession and recovery becomes too difficult. As the world saw in the case of the Euro Zone crisis—there was a fear of such a recession by first quarter of 2013.
(For discussion on ‘Retrocession’ see Chapter 22).