Many have heard the term "recession." What it is? In simple words it explaining is not so difficult. It is easy to understand what exactly the phenomenon is. Wanting to understand the nature of the processes taking place in the country, every rational person will want to put all the dots on the “i”.
What it is?
Is the period of recession dangerous and harmful, or can it be relatively calmly survived? This is a very important issue for anyone planning their business activities. The recession in the economy is the period when the pace of development slows down, and the state economy is in decline. Indicators stop growing or fall over two quarters in succession.
Clearly understand what a recession is, we can, if we see how business activity falls, the number of manufactured products decreases, less profit arrives. Difficulties are starting to find work among the population. There is no former demand for services and goods.
It is well known that prosperity cannot last forever, so that after an economic recovery has taken place, as a rule, a recession in the economy begins. This is followed by crises and the onset of depression. However, understanding what a recession is, one can also find ways to solve this problem. In this case, the state economy can be normalized.
What is meant by stagnation?
This term is closely related to the concept of "recession". What is this, in simple words can be explained by paying attention to situations in which the economy completely stops. Trade and production processes are degrading. People lose their jobs en masse, and if they find something to do, they don’t get the money they deserve for their work. The standard of living is getting worse.
What is a recession, it becomes clear if you follow the corresponding long-term economic processes. They can stop only if measures are taken to neutralize the situation. Only then can the situation be improved. Otherwise, people have great difficulties.
The presence of the process in Russian realities - is it possible and necessary to overcome?
The reason for the recession is clear and inevitable. Any takeoff is followed by a fall. During improvements, the economic system is getting better, but there comes a period when its viability must be checked. The financial system, as it were, passes a kind of obstacle path. What is a recession, it becomes clear when we see the difference between the former positive period and the current, inferior to him in many respects.
It is very important at this moment to take the right measures to neutralize the recession. If done correctly, this phenomenon will not cause significant harm. Right now, the government must show its best and take the state out of this situation. If you make the wrong decisions, it may even begin a crisis in the economy.
What are the types of this process
In total, experts distinguish three types:
- A recession that appears unexpectedly. It becomes a consequence of changes that also could not be planned. This may be the beginning of the war, a decrease in prices on the world market for raw materials and fuel. The state budget is in short supply, the level of GDP is declining. Economists believe that the phenomenon has a high level of danger because it is almost impossible to prepare and insure. The same applies to the selection of measures to overcome the situation.
- The political (psychological) type of recession is associated with the fact that consumers show distrust. The same applies to business entities and individuals investing in it.The process of purchasing certain goods is more sluggish. Investments are getting smaller, as is the course on securities. However, in this situation there are quite effective and quick ways out. The main thing is to assure the population of the stability and resilience of the economy, lower interest rates, arm themselves with psychological methods and use them.
- The third type is the result of increased external debt. There is a drop in stocks and the value of goods, the amount of working cash is reduced. This is dangerous because the process can drag on for several years.
What are the signs of a recession?
If, after analyzing the situation in the country, the following symptoms are found, we can talk about the presence of stagnation:
- unemployment in the country is growing, moreover, this process is slow and initially imperceptible;
- production is degrading, but still functioning, and the population receives all the products necessary for life;
- stock indices gradually fall;
- inflation is ramping up;
- capital migrates abroad.
Deterioration is not critical; it occurs smoothly and gently. Inflation can have a level of only two to three percent. A recession can be called a stepping stone that can lead to depression if it is not neutralized, but in itself it does not pose a great threat.
How does a recession begin, and what does it lead to the state’s economy?
There are four most common causes:
- Change of market conditions. Military action and a drop in fuel prices can lead to this. For example, for Russia, such a key product is oil. If a barrel gets cheaper, the budget is in short supply.
- The decline in production in the country. There is more import, domestic producers do not show initiative. Consumers do not need to give preference to domestic products if the imported goods are in no way inferior in price and quality.
- Household incomes are falling, which means that demand is falling. The economic situation is getting worse.
- Becomes less investment. People in whose hands the money is concentrated do not trust the country. It is better to preserve funds abroad than in a nationally unstable market.
The state should regulate all these processes, monitor the state of the economy and deal with their improvement. Only in this way will it be possible to achieve the desired result and reduce the recession in the economy. Even more than that, this is the only way we can guarantee a decent future for ourselves and our children.
