Early 2000s recession
The early 2000s recession was a major decline in economic activity which mainly occurred in developed countries. The recession affected the European Union during 2000 and 2001 and the United States from March to November 2001. The United Kingdom, Canada and Australia avoided the recession, while Russia, a nation that did not experience prosperity during the 1990s, began to recover from it. Japan's 1990s recession continued. A combination of the Dot Com bubble collapse and the September 11 attacks lengthed and worsened the recession.
This recession was predicted by economists because the boom of the 1990s, accompanied by both low inflation and low unemployment, slowed in some parts of East Asia during the 1997 Asian financial crisis. The recession in industrialized countries was not as significant as either of the two previous worldwide recessions. Some economists in the United States object to characterizing it as a recession since there were no two consecutive quarters of negative growth.
Canada
Canada's economy is closely linked to that of the United States, and economic conditions south of the border tend to quickly make their way north. Canada's stock markets were especially hard hit by the collapse in high-tech stocks. For much of the 1990s the rapid rise of the TSX had almost wholly been attributed to two stocks: Nortel and BCE. Both companies were hard hit by the downturn, especially Nortel, which was forced to lay off much of its workforce. The September 11 attacks also hurt the Canadian stock markets and were especially devastating to the already troubled airline sector.However, in the wider economy, Canada was surprisingly unhurt by these events. While growth slowed, the economy never actually entered a recession. This was the first time that Canada had avoided following the United States into an economic downturn. The rate of job creation in Canada continued at the rapid pace of the 1990s. A number of explanations have been advanced to explain this. Canada was not as directly affected by 9/11 and the subsequent wars, and the downward pressure of these events was more muted. Canada's fiscal management during the period has been praised as the federal government continued to bring in large surpluses throughout this period, in sharp contrast to the United States. Unlike the United States no major tax cuts or major new expenditures were introduced. However, during this time, Canada did pursue an expansionary monetary policy in an effort to reduce the effects of a possible recession. Many provincial governments suffered greater problems with a number of them returning to deficits, which was blamed on the fiscal imbalance. 2003 saw elections in six Canadian provinces and in only one did the governing party not lose seats.
Russia
The Soviet Union's last year of economic growth was 1989, and throughout the 1990s, recession ensued in the Former Soviet Republics. In May 1998, following the 1997 crash of the East Asian economy, things began to get even worse in Russia. In August 1998, the value of the ruble fell 34% and people clamored to get their money out of banks. The government acted by dragging its feet on privatization programs. Russians responded to this situation with approval by electing the more pro-dirigist and less liberal Vladimir Putin as President in 2000. Putin proceeded to reassert the role of the federal government, and gave it power it had not seen since the Soviet era. State-run businesses were used to out-compete some of the more wealthy rivals of Putin. Putin's policies were popular with the Russian people, gaining him re-election in 2004. At the same time, the export-oriented Russian economy enjoyed considerable influx of foreign currency thanks to rising worldwide oil prices. The early 2000s recession was avoided in Russia due to rebound in exports and, to some degree, a return to dirigisme.Japan
Japan's recession, which started in the early 1990s, continued into the 2000s, with deflation being the main problem. Deflation began plaguing Japan in the fiscal year ending 1999, and by 2005 the yen had 103% of its 2000 buying power. The Bank of Japan attempted to cultivate inflation with high liquidity and a nominal 0% interest rate on loans. Other aspects of the Japanese economy were good during the early 2000s; unemployment remained relatively low, and China became somewhat dependent on the Japanese exports.European Union
Transition left the economy of the European Union in a cautiously optimistic state during the early 2000s. The most difficult years were 2000–2001, precipitating the worst years of the American recession. The European Union introduced a new currency on January 1, 1999. The euro, which was met with much anticipation, had its value immediately plummet, and it continued to be a weak currency throughout 2000 and 2001. Inflation struck the Eurozone for a few months in summer 2001 but the economy deflated within months. In 2002, the value of the euro began to rapidly rise. This hurt business for companies based in Europe, as the profits made abroad had an unfavorable exchange rate.France and Germany both entered recession towards the end of 2001, but in May 2002 both countries declared that their recessions had ended after a mere six months each. Both economies suffered from global tech crash with the ruling German party introducing the then unpopular austerity, tax cuts and labor reforms nicknamed Hartz concept to boost the German economy in wake of an economic slump that would persist until the mid-2000s with unemployment peaking in early 2005 of 12.7%. However, some European Union countries – including the United Kingdom – managed to delay sliding into recession until the late 2000s.
In the case of Spain its economy did not experience a recession but continued to grow because it was in the Spanish property bubble that ended up bursting in 2007.