What is a recession in the economy

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:44

In recent years, many people seek to find out what causes the crisis, and what is a recession. This interest did not arise in a vacuum. The development of information technology and the emergence of the Internet allow interested parties to be constantly aware of the processes taking place in the stock and financial markets. Moreover, they have a real opportunity to engage in various kinds of speculation in the foreign exchange market. In open sources, you can find data that people working in this area have incomes much higher than those who are employed in the real sector of the economy. This is the specificity of the modern world economy.

Answering the question of what a recession is, we need to make a brief digression into history. In the first third of the last century, an economic crisis arose in the United States. Commercial production volumes initially slowed down, and then reached zero values. Experts call this phenomenon a crisis of overproduction. Among the most advanced analysts appeared those who calculated the cyclical nature of the crisisphenomena in a market economy. World-famous scientists who have received Nobel Prizes are vying to prove that crises can occur in 3-4 years, or in 7-11 years, or in 15-25. The most popular and demanded by the population cycle is 45-60 years. It was calculated by the famous Soviet economist and mathematician Nikolai Kondratiev.

So what is a recession? This is a decline in production. If within six months the growth of the gross domestic product, everyone knows it as GDP, is equal to zero, or has a negative value, then we can safely conclude that a recession has begun. This phenomenon always follows a period of upsurge and precedes a period of crisis and depression. This is the state of the economy of developed countries after the crisis that began in 2008. In this context, the forecast for Russia's economic development for the coming years looks very ambiguous.

According to the rules on the basis of which the modern economic mechanism is built, it is impossible to avoid crisis phenomena in the economy. The classics of liberal approaches do not want to agree with this and do their best to use other words to characterize this phenomenon. Instead of crisis and depression, it is proposed to use the terms "temporary recession", "slowdown" or "rollback". But no matter how you put it, the meaning of these definitions, embodied in real life, is that they lead to a decline in production, a decrease in incomes of the population, and an increase in unemployment. Within the currentmechanism, Russia's economic forecast does not imply a positive development of the situation.

Summing up the conversation about what a recession is, it should be noted that the decline in production occurs for several reasons. The most unpleasant reason is a war or a major conflict that can radically change the situation in the global economy. The second reason is political or psychological. When people in many countries refuse to buy British beef, it causes negative consequences for the whole economy of the country. Another reason may be the excessive obligations of the state to certain categories of citizens. They promised to increase pensions, but it did not work. Here is the pre-crisis situation.