History repeats itself. If you have been following financial news, you might have come across the apparent signs that we're heading for a recession.The reports of job losses, economic slowdown, client frauds, bank frauds and liquidity crisis are now the talk of the town...It seems we are heading towards a global recession. Despite such uncertainities, there are industries that expand and do well while the rest of the economy suffers and contracts.
Let’s see which industries thrive during such panicky times:
The first industry that pops into my mind while thinking about companies that can perform well during economic slowdown is the healthcare industry. Whether a person has enough money or not, one makes sure to get the right medication. Not only this, medicines are necessary products, the demand for which will never vanish even if a recession takes place. A great example of such a company would be Johnson and Johnson.
The second industry is- The education industry- Education is one industry that can never slow down. Kids will continue to go to school and parents will continue to pay for it despite recession, stagflation, or economic breakdown. During a recession, jobs can be lost, but the people's hunger for education grows. Many people decide to continue their education (be it through online or offline) when they lose their jobs. The demand for higher education increases as people are still optimistic about achieving their goals. People look for the best options to find another job, and getting higher education becomes a priority.
FMCG industry is the 4th largest industry in the Indian economy with Household and Personal Care accounting for most of the sales in India. FMCG products are sold quickly as the demand is non-elastic. Regular daily items like detergent, toothpaste, skin care products etc., are such basic necessities that can’t be avoided.
This sector deals with necessity products. We feel that we have maintained our lifestyles even when our income has dropped. Some of the major players are- ITC, Dabur.
Believe it or not, candy consumption in India increased dramatically during the recent economic slowdown. Not only this, the market is expected to grow annually by 6.7% (CAGR 2019-2023).
The next industry that I would dig deep into is the Utility Industry- Even during recession, we won’t stop drinking tea, or using the water heater right! We'll have to pay the electricity bill, water and gas bill. These payments cannot be delayed. This proves that the basic necessities shall always be fulfilled untill the situation gets out of hand.
The next in the list is Financial Advisory firms. The stock market is extremely sensitive to market news. One such example is the news of the US-China Trade war. The market sentiment took a forefront, the result of which was wobbly movement of some stocks. So, in my vision, when the markets crash and start reacting to the news, a lot of people have distorted vision for investing and will need consultation help.
I want to wrap up saying that in such a messy situation, one should definitely have a deep insight into the pros and cons of investing in each of these industries and take measured steps. By doing your research, you can invest in an industry that offers security no matter the state of the economy.
Note- No industry is truly "recession-proof industry," but there are specific industries that are more resilient during economic downturns than others.n