We explain what an economic crisis is, its characteristics and the causes of this phase. In addition, its consequences and some examples.
We understand by economic crisis a certain phase of an economic cycle that is characterized by having negative effects , such as recession , contraction or economic depression, which means that in the flow of money begins to be scarce.
Economic crises are a frequent phenomenon of contemporary societies , especially those belonging to the so-called Third World, whose industrial and economic bases are not always very solid or depend on the market price of the export raw material, for example.
In any case, in today’s interconnected world, the global economy often experiences fluctuations and setbacks in the face of unforeseen events or regional failures that destabilize the financial system as a whole.
This can occur in various magnitudes and usually causes social, economic and even political damage , since it is an important source of discomfort in the populations , especially when it is fought with unpopular saving measures.
Types of economic crisis
According to its triggering nature, it is possible to talk about various types of economic crisis, such as:
Economic crises are characterized by the inconvenience of operating the economic system for a long time, negatively affecting the quality of life and other social and political areas.
In addition, they have two important characteristics: instability in the markets, which is difficult to predict the course to follow and therefore untimely, risky actions, which may well contribute even more to the crisis; and on the other hand the eventual transmission of said instability of a certain sector or geography (isolated) to the rest of the systems or at least to the surrounding ones (centered), in case of being too prolonged in time .
Among the most common causes of economic crises are:
The consequences of economic crises are always negative and tend to be the following:
In the year of 1929 there was a great global economic crisis that became known as the Crisis of 29 or the Great Depression. This one originated in the United States, product of the fall of the bonds of the stock market of Wall Street known as the “Crac of 29” or the “Black Tuesday”, and that extended quickly by all the countries of the world, causing fall of national income, tax revenues, business benefits and prices in general.
This resulted in an increase in unemployment of 25% in the United States and in some countries of 33%, in addition to a decrease in international trade from 50 to 66%.
Examples of economic crisis abound, for example:
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