3 ASX shares to buy to recession-proof your portfolio

With Australia now in a per-capita recession, here are 3 ASX shares you can buy to protect yourself.

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Australia's last recession was 27 years ago, starting in September 1990.

Since the early 1990s, our economy has enjoyed decades of economic growth — the mining boom from 2002 to 2012 and the recent housing price surge in Melbourne and Sydney being two of the biggest examples. But recently, it looks like Australia's economic growth is beginning to soften.

In March, it was widely reported that Australia had two consecutive quarters of negative gross domestic product (GDP) growth for the September and December quarters in 2018. At -0.1% and -0.02% respectively, we have officially entered a per-capita recession.

What does it mean to be in a per-capita recession?

GDP measures the total value of goods and services produced by a country. Most central banks and governments around the world like to target between 2% and 3% GDP growth each year. This is the sweet spot between a declining economy with deflation and a growing economy with high inflation.

When the big figures that impact an economy weaken, that's when you get a recession. A per-capita recession, however, is different.

A per-capita recession means the population is growing at a faster rate than the economy. To use an analogy, the slices in a pie are growing faster than the pie itself.

3 ASX shares you can buy to pro officially entered a per-capita recession tect yourself in a recession

In any market cycle, there'll be winners and losers. To be a winner, the best thing you can do is be prepared and invest defensively until economic growth returns. Here are 3 ASX shares you can buy to protect yourself in a recession:

AGL Energy Limited (ASX: AGL)

People need gas, electricity and hot water, and that's not going to change in a recession. As one of Australia's largest energy providers and gas suppliers, AGL Energy is a great defensive buy. With a 5.46% dividend yield, this will provide you with stable cash flow to spend or reinvest.

Long-term, AGL Energy's focus on renewable energy will also put the company in a competitive position as the world looks to move to more sustainable energy sources.

Sonic Healthcare Limited (ASX: SHL)

Heading into a recession isn't going to slow demand for medical diagnostics. As an international medical diagnostics company, Sonic Healthcare Limited is a great option for adding healthcare shares to your portfolio.

With a recent acquisition in the US, plus its other services including laboratory, radiology and primary healthcare services, Sonic Healthcare Limited is likely to continue its strong growth especially if it meets or exceeds its annual earnings guidance.

Betashares Global Healthcare ETF (ASX: DRUG)

Economic growth has slowed around the world recently making Betashares Global Healthcare ETF another great investment to balance your portfolio. This ETF tracks an index of international healthcare companies.

Year to date, the Betashare Global Healthcare share price has grown by 5.95%. While this isn't the astronomical growth we've seen from other companies this year, the need for healthcare coupled with a globally ageing population makes this another great defensive investment option.

Foolish takeaway

It's important to remember we're not in a full-blown recession. To enter a recession, other numbers would need to weaken too such as consumer spending and export prices.

So, while we're not in a recession yet, it's good to be prepared by making sure your portfolio is balanced with stocks that still perform well in an economic downturn.

Looking for more than 3 recession-proof shares for your portfolio? Check out the Motley Fool's top 3 bluechip shares for 2019.

Motley Fool contributor Nicola Smith has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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