What is a Recession?

A recession is a substantial and prolonged economic downturn that affects a large part of the economy. Typically, a recession is defined by two consecutive quarters of negative gross domestic product (GDP) growth.


How many has Australia had?

Australia has experienced 20 economic ‘recessions’ (including two ‘depressions’) since the 1890s.


How have Shares Performed in the Recession?

  • Share prices rose during 17 (85%) of the 20 economic recessions in Australia.
  • Share prices rose during each of Australia’s last nine recessions.
    • The last time falling share prices accompanied a recession was in 1938-39 (with share prices falling by only -1.8%)

      Shares Prices During Recessions

Share prices rose in each of the recent well-known recessions:

  • Keating’s 1990-91 “recession we had to have”
  • The long 1981-1983 recession
  • The 1975 post-Whitlam dismissal recession
  • The 1971-72 oil crisis recession.

Investor Opportunities

Although share prices often fell heavily around the time of economic crises, in almost all cases, the share market fell before the economic contractions.

Most of the significant share market crashes did not occur during economic ‘recessions’ – not the 55% share crash in the GFC, the 50% crash in 1987, nor most of the other major declines.


Conversely, some of the best years for Australian shares have occurred during economic contractions or periods of weakness (following significant share price declines). For example, in 1983—the peak year for Australian shares—despite the 1981-1983 recession, shares surged by +60%.

The challenge for investors lies in summoning the courage to buy shares amid economic contraction and negative media headlines filled with concerns about corporate collapses, bankruptcies, and rising unemployment.

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