An economic crisis never happens unexpectedly. It is anticipated by a recession. Any economic system, even a progressive one, sooner or later enters a recession stage. A recession is undesirable, but inevitable.
What does recession mean?
Recession- this is a long-term, initially not very pronounced decline in production and business activity, which worsens over time and turns into a crisis.
The recession period is characterized by such phenomena as:
- negative GDP dynamics (both the quantity of products produced and the demand for them decrease);
- low business activity;
- lack of progress in the economy.
A recession is the stage following the stage of rapid economic development. Since all economic systems are cyclical, recession can be considered a natural process.
It is known that there are four phases in every economic cycle. Rise and prosperity are inevitably followed by a stage of stabilization and stagnation. Stagnation is replaced by recession. The “life cycle” of the system ends with an economic crisis.
It is futile to try to predict when a recession will begin. However, the government can prepare the country for it, take a kind of “depreciation” measures that will partially neutralize the negative phenomena accompanying the recession. A crisis will come only if the state's economic policy turns out to be ineffective.
Causes of recession in the economy
An economic downturn does not happen suddenly. It is the result of many events and processes.
- 1.
The cause of a recession can be global and unexpected changes in the market, which, in turn, are provoked by political changes. Roughly speaking, armed conflicts or jumps in gas/oil prices on the world market may be to blame for a slowdown in production and a decrease in demand for any product.
Unfortunately, the Russian economy is clearly dependent on the cost of oil. As soon as the market price of oil decreases, the budget begins to experience underfunding, which ultimately affects the volume of gross domestic product. Experts believe that a recession that develops according to this scenario poses the greatest danger to the state, since it cannot be predicted and neutralized in time.
- 2. The second possible cause of recession is a total decrease in production volumes. A serious decline in production was recorded in 2008. It amounted to more than 10%.
- 3. The lack of “extra” money among citizens and a decrease in their purchasing power also lead to a recession. True, it is believed that a recession caused by these reasons is completely surmountable and does not have such dire consequences as a recession provoked by wars or market turmoil.
- 4. Another factor causing a recession is capital outflow and lack of investment. Replenishment of the state's fixed capital occurs at the expense of private enterprises. If the government is interested in these injections, it must provide business with conditions under which it can develop normally within the framework of the national economic system.
Consequences of recession in the economy
Now let's list the consequences of the recession:
- financial markets collapse;
- production rates are slowing down;
- banks limit the issuance of loans;
- interest rates on loans are rising;
- the number of unemployed is also growing;
- household incomes are declining;
- GDP volume decreases.
All these phenomena together lead to an economic crisis.
The result of the decline in production is a decrease in the need for labor. Industrialists fire people, and they can no longer find a new job. A decrease in income leads to a reduction in needs. As a result, the demand for goods that can be dispensed with decreases. Production does not experience any incentives for development.
Individuals and legal entities become debtors of banks. Circumstances force banks to limit the issuance of loans. Investment in research projects and industrial enterprises is reduced, and the country begins to lag behind in terms of science and technology. Stagnation in the production sector affects the value of shares issued by industrial enterprises. They lose value.
The next stage of the crisis is characterized by rising inflation and the beginning of the devaluation of the national currency. Prices continue to rise and incomes continue to fall. The standard of living of the population is also falling, which leads to mass discontent.
The government is turning to more prosperous countries for financial assistance. The state's external debts are growing. To pay off one loan, you have to take out several others.
All these negative phenomena directly affect the volume of GDP. Its decline indicates a deterioration in the economic situation in the country.
It is noteworthy that there is no consensus among economists about the nature of the recession. Some believe that this phenomenon in itself is not critical, while others believe that recession, collapse and depression are synonymous.
The term comes from the Latin word stagnum, meaning “stagnant water.” This economic period is characterized by stagnation of production and trade, rising unemployment and a decline in people's living standards due to insufficiently high wages. The economy seems to freeze, becoming impervious to innovations and the progress of science and technology. Economics students study stagnation using the economic conditions of the United States in the 1930s as examples. Another typical example of a “stagnant” period is the economy of the USSR at the end of the 1980s. Academician O. Bogomolov claims that it was the stagnation period that marked the beginning of perestroika.
Market stagnation
A stable, unchanged market situation without growth in sales volumes is market stagnation. That is, in order to reach a stagnation state, the market simply needs to stop growing. As soon as market growth stops, inflation, which was previously compensated by an increase in the number and turnover of sales, is no longer compensated. Everything is gradually falling into disrepair. Therefore, a stagnation period is always followed by a recession—that is, a fall. The financial crisis completes this chain. As a rule, only those states that refuse to artificially increase markets can recover from this crisis.
Period of stagnation
The most striking example of economic stagnation is the situation in the United States market in the late 1920s and early 30s, after the so-called Great Depression. It was then that this term appeared - it was introduced by an American economist named Hansen. The end of the Soviet era was also marked by the “freezing” of market processes and even the appearance of the expression “Brezhnev stagnation.” This time is associated with a lack of goods in stores and long queues of many kilometers. As for modern Russia, at a recent forum in Davos, where market prospects for 2016 were discussed, A. Kudrin said that the period of stagnation in our country could well be overcome.
Economic stagnation
What synonyms have not been invented for this term over the past 100 years - “freezing”, “swamping”, “timelessness”. But, in essence, all this is economic stagnation. Experts argue that no matter how hard the state leadership tries, this period still cannot be avoided: any economic model is cyclical and develops according to the following algorithm:
- Climb.
- Stagnation or stabilization.
- Recession.
- A crisis.
Thus, economic stagnation is just one inevitable stage of development of any country on our planet. It is impossible to prevent it and remain in the growth stage forever, but you can prepare for it in advance.
Stagnation in Russia
The first pronounced stagnation in Russia occurred immediately after the collapse of the Soviet Union. This was a transitional type of stagnation, when the country tried to integrate into a new free market model. The work of production stalled, agriculture went into decline, and a sharp outflow of intellectual resources abroad began. It took a long time for our country's economy to recover and competitive goods to appear on the market. As for the current situation, according to Alexei Kudrin, considered one of the best finance ministers in the entire history of the Russian Federation, “the moment for restructuring the country’s economy has not yet been missed.”
Social stagnation
There is not only economic stagnation, but also so-called social stagnation. The American Dictionary of Sociology defines it as follows: “A period when society is “marking time,” socio-political life stops, and no factors are foreseen to change people’s lives.” This is a rather difficult period, which is characterized by:
- Stopping the development of culture and art in the country.
- Mass humiliation of certain categories of the population or an entire people, deliberately organized by the authorities (the most tragic example is the genocide of the Jewish people during World War II).
Organizational stagnation
Production may “stalle” not only on the scale of the entire state, but also on the scale of an individual enterprise. In this case, the following processes occur:
- The quality of manufactured products is decreasing
- Sales volumes are falling
- Technical resources are idle and not used to their full potential
- The product ceases to be competitive in the market and loses to analogues: it becomes not modern, not fashionable, etc.
The stagnation of an organization can only be overcome from within. It is necessary to restructure production models, revise business plans, improve the ideological component and re-motivate the team.
Reasons for stagnation
It is impossible to quickly prepare for economic stagnation after seeing its forecast in the news - its preconditions are too complex and varied. In April 2016, the “Own Business” portal published a study on this topic, highlighting the following reasons for stagnation:
- Bureaucratization of government agencies. There is a growing number of employees whose work is essentially useless. Maintenance is becoming more complicated, and the administrative apparatus is disconnected from the needs of the population.
- Corruption as a state apparatus and business areas.
- Lack of investment in research and development.
- Gradual failure of production equipment.
- Breakdown of foreign trade relations.
Types of stagnation
Economists identify the following types of stagnation:
- Monopolistic
- Transition
In the first case, monopolies, reigning in the market, “pressure” small businesses. Production stands idle, unemployment occurs on a massive scale. History shows that the way out of this situation is the accumulation of achievements of science and technology and the export of capital outside the state. Another stagnation of the economy - transitional - is caused by a change from the command-administrative market model to a free one. The country is no longer of interest to investors, the national economy is suffering, and huge fields remain unsown. In this case, experts say, the economy will face an inevitable recession, depression, and only then gradual growth.
Consequences of stagnation
As a rule, the consequences of stagnation are disastrous. Almost always observed:
- Declining production rates and, as a consequence, falling prices for natural resources
- Employees losing their jobs
- Extremely low purchasing power of the population
- Stopping intellectual work and research activities
- The brewing crisis of enterprises in virtually all business sectors
The most predictable consequence of stagnation is a recession, which, at best, will keep production at zero, and at worst, lead to a negative GDP value.
What is real estate market stagnation?
Stagnant processes can affect both the market as a whole and its largest industries - for example, such a colossal area as the purchase and sale of housing. So, what is real estate market stagnation? This is a situation in which the intensity of purchase and sale of apartments and houses decreases compared to similar periods in previous years. There is a demand for housing, but the supply cannot keep up with it, since construction is not taking place. The latest example is the Russian situation in 2015: due to the external political “blockade” of our country, there was a long-term stagnation in the market of both new buildings and secondary housing.
What is ruble stagnation?
Ordinary citizens without an economic education are often interested in what is ruble stagnation? First of all, let's say that the state of the currency is a mirror of the country's economy. If the national currency does not develop, this means stagnation in the economy of the state itself. And vice versa: economic growth significantly strengthens the domestic currency and its competitiveness on the world stage.
In recent years, the Russian currency has been declining and inflation has been rising. A typical example: in the first 3 quarters of 2014, the ruble depreciated by an average of 35%. Recently, E. Nabiullina stated that the Central Bank expects that by the end of 2016 the national currency will strengthen, and the inflation rate should not exceed 6%.
Recession Translated from Latin, Recessus means retreat. The phase of the economic cycle that occurs during a recovery and is a precursor to a depression and a crisis state of the economy is called a recession. A recession, as a phenomenon, slows down the rate of national economic growth, its manifestations are observed in a moderate decline in production or negative and zero dynamics of GDP growth.
The concept of recession in economics and macroeconomics is interpreted as a moderate decline in production, which is not critical for reducing the rate of economic growth. When production growth falls for six months, the size of GDP stands at zero or falls to a negative value.
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It is almost impossible to predict a recession, but with the right government measures it can be reduced. The development of a recession can become the source of a serious economic crisis.
The business cycle represents regular changes in the level of production, including employment and profits. The duration of one business cycle ranges from 2 to 10 years. The economic cycle is a single process that sequentially passes through periods of economic activity; they differ in direction and level of activity.
There are the following phases of the economic cycle:
Crisis, aka recession
Subsequently, economic equilibrium is disrupted. A crisis occurs after a recession—production growth is accompanied by a decline. A crisis state occurs after a decrease or decrease in the volume of manufactured products; in particularly difficult situations, a reduction in work entails the destruction of productive forces.
In a market economy, a production crisis most often occurs; it negatively affects the sale of goods, a fall in prices and production volume. A decrease in production volume and subsequently the balance of unsold inventories, a reduction in production, a drop in demand for labor, a decrease in profits, a decrease in creditworthiness and a slowdown in the growth of prices for manufactured goods and services are factors of recession.
A production crisis due to the insolvency of an enterprise leads to bankruptcy.
Depression
Follows the crisis. During a depression, surplus products are gradually sold off, product sales resume and production volumes increase. The economy is stagnant and GDP has stopped falling.
The resulting free capital is integrated into banks, which expands the possibilities for providing loans. Gradual economic growth during the depression stage precedes economic recovery. At this phase, organizations face the main task of increasing profits; during the crisis, costs were reduced.
Revival
Is the latest level of economic recession. During the recovery phase, there is a gradual expansion of reproduction and a return to the level of the pre-crisis state.
Rise or expansion is accompanied by active economic development. Expansion implies exceeding production volumes that were before the crisis. The rise is accompanied by an increase in the price level, a decrease in unemployment, an increase in loan capital and the attraction of investment.
The main phase of the economic cycle is crisis (recession). A crisis accompanies the end of one period of development and precedes the emergence of a new cycle, thus cyclicality arises. During a crisis, the entire established reproduction pattern is destroyed and a new, more developed system is created. The mechanism of falling prices during a recession leads to falling stock prices, falling interest rates, declining profits, and bankruptcy.
The crisis eliminates the overaccumulation of capital through the depreciation of funds, which stimulates the renewal of production and improvement of technology.
Causes and types
An economic crisis can arise for many reasons, some of which are the following factors:
- A recession can occur due to unplanned global changes in market conditions. Events that influence changes in the global economy can be wars, natural disasters and sharp fluctuations in the cost of natural resources (gold, oil, coal, etc.).
- A sharp drop in sectoral industrial production leads to a recession.
- A recession may arise from a decrease in the purchasing power of the population. A decrease in income levels leads to a decrease in sales volumes, which results in a decrease in production volumes.
- A recession can be caused by a decline in the national economy. The majority of public capital consists of investments made by private entrepreneurs. Accordingly, a decrease in the level of investment leads to a state crisis.
Depending on the causes of occurrence, there are three types of recession:
- Influenced by changes in market conditions- with very sharp changes in global economic conditions, the preconditions of which are wars and a decrease in the pricing policy for natural resources, there is a risk of a recession. Such conditions are very dangerous, since they are not typical and cannot be analyzed or predicted.
- Political and social aspects, as the cause of a recession, are less dangerous for the economy, since they can be regulated and eliminated. Such reasons include a decrease in consumer confidence, a decrease in investment and a decrease in business activity.
- Loss of economic balance, during which debt obligations increase and there is a rapid drop in market prices also leads to a crisis.
Consequences
The main consequences of a recession in the economy include:
- decline in production volumes;
- collapse of financial markets;
- decreased creditworthiness;
- increase in unemployment;
- reduction in the level of income of the population;
- fall in GDP;
The most critical consequence of a recession is the economic crisis. A production decline entails job cuts. Lack of money and unemployment leads to a decrease in demand for manufactured products. Unsold goods generate unnecessary costs for maintaining inventory.
When a surplus of products occurs, an enterprise reduces production volumes. Citizens have debt on loans, as a result of which the policy of lending to legal entities and individuals is becoming harsher, and investment in the research and development industry is being reduced. The securities market collapses and stocks become significantly cheaper.
Next comes inflation and a decrease in the purchasing power of the population. The state, trying to deal with the situation, increases its external debt by taking out loans. In general, the national level of reproduction and GDP are declining.
Economic stability is achieved only after many years of work; the main criterion for avoiding a crisis is forecasting and regulating recessions.
Historical example
History knows several examples of recessions that affected entire groups of countries around the world. Thus, in the 1990s, the global financial crisis affected the economies of the countries of the European Union, Latin America, Southeast Asia and Russia. A clear example of a financial and economic recession that has affected almost the entire world economy is the global crisis that began in 2008.
In 2006, the US mortgage system collapsed. Over time, the crisis engulfed the banking and financial system of the state. By the beginning of 2008, the crisis had become global. The impact of the crisis was reflected in a decrease in the scale of production, a decrease in the level of GDP, and an increase in unemployment. Some countries, including Russia, have reduced lending to a minimum. In Russia, the global crisis led to the bankruptcy of many banking organizations, large firms and a decline in the living standards of the population.
The global financial crisis has affected the economies of developed and developing countries. World practice has shown that the most important task of any state is to ensure financial stability and prevent recession.
The question of what a recession is in a state’s economy may worry the majority of its residents who are interested in the situation. Understanding this economic process will allow you to understand what impact it has on the economy and life of the state and whether it is worth fearing.
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Recession concept
There are many definitions of this economic term, so it is worth familiarizing yourself with the most significant:
- – one of the phases of the economic cycle, which is a precursor to the financial crisis.
- - a term related to the macroeconomics of a state, it denotes a decline or a noticeable reduction in production rates immediately following the so-called boom, characterized by an indicator of gross domestic product equal to zero or even having a negative value for 6 or more months.
- – a moderate, non-critical decrease in production indicators, entrepreneurial activity and economic development rates, usually associated with a decrease in GDP.
- – slowdown or decline in the growth rate of gross product.
- - one of the phases of the economic development cycle, which is the next after the economic recovery, accompanied by the achievement of the maximum indicator of economic activity. This phase is a precursor to depression or crisis.
- – a state of the economy when GDP has been declining for 2 or more quarters, i.e. factories begin to reduce output, stores sell less, and, accordingly, buyers buy less.
- – a serious reduction in business activity in the country, which is accompanied by a large number of negative consequences (unemployment, decline in stock markets, reduction in investment, etc.).
A recession is certainly accompanied by three main signs:
- The phase of economic life immediately following an expansion or boom;
- Accompanied by a reduction in economic activity;
- Leads to a reduction in production.
Many definitions mention that a recession is a phase of the economic development cycle, and the cycle itself consists of 4 main phases:
- Climb.
- Stagnation.
- Economic depression.
The duration of all phases of the economic cycle, as practice shows, is about 10-15 years.
The recession does not mean at all that important indicators have stopped growing. This phase may indicate that the growth rate of key indicators simply decreased over the course of six months. Usually a recession is a precursor to a crisis, but if all the necessary measures are taken in time, then such consequences can be avoided and the situation can be returned to normal.
Reasons for the onset of recession
This phase of the economy can occur as a result of a whole list of various factors, starting from the cost of petroleum products and ending with the number of unemployed in the country. The main reasons for its occurrence are considered:
- The emergence of conditions favorable to the development of a recession due to unplanned internal economic changes. Thus, this state of the economy may be caused not by economic events in the country, but by political ones, or by changes in prices at the world level for natural resources, and, in particular, oil. The Russian economic region is dependent on the price of this mineral, and in the event of a serious drop in its value, the country's budget will lose a significant amount, which, in general calculations, leads to a drop in GDP. Economists argue that this type of recession is the most dangerous due to the impossibility of predicting it in order to take measures in advance to support the economy.
- A drop in the pace of industrial production processes, which inevitably entails a recession.
- The transition of the economy to the recession phase can be provoked by a decrease in the income of the population, which leads to a decrease in the ability to buy and worsens the economic situation of the country. This type of recession is not the worst, and economists argue that it can be dealt with easily and quickly, preventing a crisis.
- A recession may be a consequence of capital flight abroad or a reduction in foreign investment and government capital. As a rule, most of the investments are attracted by private entrepreneurs. And in order to avoid such a recession, the government should create conditions so that entrepreneurs seek to invest their funds in the national economy.
Types of recessions
Economists distinguish three main types of recessions, depending on the reasons for their occurrence:
- An unplanned recession that occurs as a result of unexpected changes. Such events could be: the onset of war, a sharp decline in the world price of oil, gas and other minerals. The consequence of such events is a deficit of financial budget funds and a decrease in the level of GDP. It is this type of recession that is most dangerous due to the fact that it is simply impossible to foresee, and it is even more difficult to determine an effective exit method.
- A recession at the political or psychological level resulting from increased mistrust of the consumer population, entrepreneurs and capital holders. It is a consequence of a decrease in purchasing activity, a decrease in investment and a decrease in the value of securities. This type of economic recession can be overcome simply by regaining the trust of buyers, which is done by reducing prices, interest rates and by putting various psychological techniques into practice.
- Recession as a consequence of the country's external debts. As a result of such debt, there is a decline in prices and an outflow of funds from the country. This type of recession is considered the most dangerous and can last for many years.
In addition to this causal classification, there is a division of recessions into types depending on the shape of the graph reflecting changes in GDP indicators:
- V recession. Characterized by a fairly powerful and high-speed decline in GDP, which in such conditions does not reach depression. The fall in such circumstances is pronounced, unique and subsequently leads to a return of GDP to its previous level.
- U recession. GDP in such a situation has a fairly long-term and stable position at a low level without serious movements along the schedule either up or down, with a rapid recovery in the future.
- W recession. As a result of this phase of the economy, there is a fairly short-term jump in the growth and development of GDP to a high level in the middle of the recession stage. The graph of such a recession resembles several type V recessions in a row.
- L recession. In such a situation, there is a fairly rapid decline in GDP, which is followed by a long and fairly smooth recovery.
Characteristics of an economy in recession
It is possible to identify that a stage of the economic process such as a recession has already begun in a country by the presence of a list of its obvious factors:
- The unemployment rate is gradually increasing without sudden jumps.
- There is a clearly noticeable decline in production, but production does not stop, but functions, providing citizens with the necessary products, but in smaller volumes.
- Stock indices began to fall.
- Inflation indicators are increasing.
- There is a significant transfer of funds abroad.
At the stage of economic recession, not all its signs become critical. So, for example, a recession is indicated by an increase in inflation of only 2-3%, at a time when all other recession indicators are active, which is evidence of the onset of an economic depression.
What does a recession lead to?
The main and most obvious consequences of this period of economic decline include:
- Reduction in production volumes of the country's enterprises.
- A complete financial collapse of the markets.
- Reducing the number and size of loans provided by banks.
- Increase in lending interest rates.
- Soaring unemployment rate.
- Decrease in income of the population.
- Inflation rate increases.
- Constant price increases.
- Increasing the country's debt.
- Fall in GDP indicators.
The most serious, dangerous and powerful consequence of a recession is the economic crisis. The decline in production volumes leads to a decrease in the number of jobs and massive layoffs. People lose their jobs, begin to save, cutting their expenses, which results in a reduction in demand, which leads to an even greater decrease in production volumes.
The debt of residents and enterprises to banks also begins to increase, which react by tightening the conditions for issuing loans. Lending volumes are sharply reduced, and this leads to a reduction in investment in science and industry. A reduction in production volumes leads to a collapse of markets and a decrease in the value of securities, especially shares of large industrial companies.
Such changes are followed by a depreciation of the country's monetary units, leading to an increase in prices, a reduction in income levels, an increase in citizen dissatisfaction and a reduction in the quality of life for the population.
The government, trying to correct the situation, begins to borrow more from its neighbors and all this leads to a reduction in the same GDP, which is a sign of the onset of a recession that can develop into depression and crisis.
The difference between recession and stagnation
The period of decline or increase is the main difference between recession and stagnation.
The stagnation phase is characterized by:
- Complete economic stagnation lasting for a long time.
- Increase in the number of unemployed.
- A serious decline in the quality of life of citizens.
- Low or almost zero GDP.
If economic stagnation is characterized by high inflation, then it is called stagflation.
A recession is not characterized by a rapid decline, but not by stagnation. And this clearly indicates that recession and financial stagnation are distinguished by periods of decline in GDP and its consequences for the situation in the country. To understand whether a decline during a recession or stagnation during stagnation is worse, it is necessary to consider each specific case separately.
A recession does not mean that the country is facing depression and people should prepare for difficult times. With a competent economic approach to government management, all the consequences of a recession can be prevented, bypassing the phase of economic depression. But, of course, this is not always possible, so before drawing conclusions about the economic situation in the country, you should consider all economic indicators and the reasons for the onset of a recession.
When describing the state of the country’s economy, experts often began to use the word “recession”; what is it in simple words, how does it differ from stagnation, crisis? Let's try to figure it out.
The Latin word "recessus" translates as retreat. It is used to determine the phase of slow economic development, which comes after the recovery stage and precedes the state of crisis or depression. The quantity of production and consumption of products decreases. A slowdown in economic growth leads to negative or zero dynamics of the gross domestic product.
The process of recession, according to experts, is natural. The economy of any country is cyclical () and periodically experiences 4 phases, following one after another. The rapid rise is followed by a period of stagnation, then an economic recession, and at the next stage - depression.
According to statistics, it takes approximately 10 to 20 years from one phase to another. Often a recession precedes the onset of a crisis situation, but timely measures taken help stabilize the situation.
9 main signs of a slowdown in economic processes:
Signs of a recession do not always reach critical levels. The onset of this economic phase may be indicated by an increase in inflation of 3-4%, and the activity of other indicators warns of an impending economic depression.
11 characteristic reasons for the slowdown in economic processes:
- Falling value of natural resources.
- Unexpected changes in business sectors.
- Reduced income due to inflation.
- Decrease in the volume of foreign investment.
- Monopoly and high taxes.
- Depreciation of savings.
- Transfer of private capital to banks in other countries.
- The impact of international sanctions.
- Introduction of innovative technologies.
- Problems of the credit and financial sector.
- Devaluation.
Often, economic problems in one state cause a recession in others and a global economic crisis.
The difference between a recession and other phases of economic development
Depending on the schedule of changes in the level of gross domestic product, a recession is distinguished:
- V with a sharp fall, but not reaching depression,
- U, when the volume of GDP is like a swing - it sometimes grows, sometimes it decreases,
- W, when there is a short-term development of GDP in the middle of the recession process,
- L with a rapid decline in GDP followed by a smooth recovery phase.
How dangerous is the economic downturn?
As a result, the country's national currency depreciates, prices rise and the population becomes dissatisfied with the decline in living standards. To correct the economic situation, the government borrows funds from other countries. The result is a reduction in GDP, which is the main harbinger of a recession, which can turn into depression and crisis.
Almost all states experienced such a crisis situation in 2008-2009. In 2014, Chinese GDP grew by 7.4%, America - 4%, Russia - 0.6%, and global GDP - 3.2%. In 2015, in addition to Russia, negative economic development was observed in 15 countries.
How long will it last and what will be the consequences? According to independent analysts, Russia will have to overcome the current difficulties throughout 2016. No one risks predicting an economic upturn or a depression, because many unpredictable factors are involved in the process.
Stagnation and the onset of crisis can only be prevented with the help of public administration. The implementation of state programs to attract investment, support manufacturing industries, and stabilize the exchange rate can have a positive impact on the development of economic processes. A recession can be managed and predicted. Only inaction and wrong policies lead to a crisis. For example, experts warned about the current American recession almost 2 years ago, so the US government took a number of measures to reduce its negative consequences and the onset of a crisis.
. Problems with cyclical economic recessions are completely solvable, so you should simply take additional measures to improve your well-being. Find sources of additional income using handicraft skills, a plot of land or investing.
