There is an old joke among many economists. It says: "A recession is when your neighbour loses his job. A depression is when you lose your job.

Currently, dark, clouds are hovering over the world economy which is sliding towards recession. Share markets in Asia, Europe and America have plunged over the past two months, precipitated by dismal corporate earnings and worsening fears of a downturn in global economic activity.

In Asia, the economies of Singapore and Japan and have already slipped into recession. The European Commission has announced that the 15 countries using the euro have slumped into recession The US, Australia as well as Britain, which is not part of the euro-zone, are also in recession.

The International Monetary Fund, in its latest World Economic Outlook report, notes that the world's economy - after four years of strong global growth led by emerging and developed nations, - is now heading towards a major downturn in its most dangerous financial crisis for 70 years.

Against this current backdrop of gloom and alarming economic events, many are asking this dreaded question: " Will the coming global recession lead to world economic depression, like the Great Depression of the 1930s? "

Before we answer this question, let us find out what recession and depression mean and the difference between the two terms.

The standard definition of recession - according to many economists - is two consecutive quarters of declining output in a country's economy.

Depression, on the other hand, is a prolonged economic slump - a severe economic downturn lasting a few years or even more. This period is marked by mass unemployment, bank failures and falling prices (deflation).

In a recent CNN/Opinion Research Corp poll, 6 out of 10 Americans - out of 1,000 surveyed - believe Depression is "likely" to happen later. The survey cited a bleak scenario of a 25 per cent jobless rate, widespread bank failures and millions of homeless Americans unable to feed their families. This scenario is similar to conditions of the Great Depression of the 1930s.

However, there are many economists, including Olivier Blanchard, chief economist of the International Monetary Fund, who sees only a remote possibility of a global depression. Dr Blanchard says the likelihood of a great depression - resulting from the global financial crisis- is "nearly nil" if the "right policies" are taken.

Dr Klaus Schmidt-Hebbel, \chief economist of the Organisation for Economic Cooperation and Development (OECD) rules out a recurrence of the full-blown Depression of the 1930s. He thinks this is unlikely because of the "massive economic plans" world leaders have in place.

World finance leaders and central bankers, some economists point out, are now better equipped and prepared to avert a depression than their counterparts in the 1930s. In the decades that ensued since the Great Depression, Governments and central banks have shown closer international coordination in their monetary and economic polices - thanks to the internet and other high-tech communication channels.

As seen in recent months, central banks have acted swiftly to slash interest rates and pump more liquidity into the financial markets. Also, Governments have displayed readiness to take direct ownership of private financial institutions to stem erosion of market confidence. With the imminent slowdown of global economic activity, Governments of many countries are expected to come up with more stimulus packages to bolster their countries' flagging economies.

Although economic depression is a remote possibility, many Singaporeans will find the going tough in the next 12 months or so. Recession, or weak growth, is likely to continue during this period.

Singapore slipped into recession during the third quarter of this year when the economy shrank by 6. 8 per cent -on top of the 5. 7 per contraction in second quarter. Economic growth, according to Singapore trade officials, has deteriorated as the slump in export demand forced factories to cut production, tourist arrivals faltered and the real estate boom fizzled out.

But economic cycles and financial crises are not new or uncommon anymore. Singapore has gone through two previous recessions during the past three decades. In 1985, recession was triggered off by reduced demand for Singapore's goods and services caused by slumps in petroleum-related and marine-related sectors. Also, the slowdown in demand for semiconductors and electronics in the US sharply reduced demand for Singapore components and parts.

Also, the situation then was aggravated by loss of international competitiveness and labour costs rising faster than productivity. Unemployment soared to more than 6 per cent in mid-1986.

I recalled that during the 1985-1986 recession, uneasiness and gloom pervaded the everyday life of many Singaporeans. Recession was the hot topic tossed around during conversations at coffee shops, restaurants, bus stops and even funeral wakes.

Fifteen years later, another recession took place - in 2001 - caused by the steep fall in global demand for electronic products and the US economic slump.. During this year, Singapore's gross domestic product shrank by 6.6 per cent in the fourth quarter and two per cent for the whole year.

Unemployment again reared its ugly head, with the jobless figure rising to 4.4 ;per cent that year. During this recession and the 1985 recession, some of my close relatives and friends lost their jobs.

We do not know how long the current global economic slowdown will last and whether it will get much worse.

The retrenchments in S'pore have once again started - this time - S'pore's largest bank - government-linked DBS - publicly shot the first salvo. But many of us have gone through the ups and downs of economic cycles, and managed to survive. The lessons we have learned from these experiences will equip us better to face the uncertainties and challenges ahead. So there is no need to be overwhelmed by the negative sentiment. For what comes down will go up again eventually.