The world economy develops cyclically, therefore periods of recession and growth are characteristic of absolutely all countries with a market system of relationships. Such cycles are characterized by periodic fluctuations in business activity in society.
History of world crises
The first known modern economic crisis occurred in 1821 in Great Britain. In 1936, crises broke out in the same Great Britain and the United States; in 1841 and 1847, the second and third crises covered the United States.
The crisis of 1857 is considered the first world economic decline. Further, before the end of the century, the world was struck by three more crises. After that, one of the most devastating crises of 1900-1901 happened, which paralyzed the economies of the United States and the Russian Empire and negatively affected the entire world metallurgical industry.
The crisis of 1929-1933 is still considered the most catastrophic for the world economy. Its center was the United States, where it went down in history as the "Great Depression". Later, however, the crisis swept through the entire industrial world.
After World War II, economists noted a weakening of cyclical fluctuations in the economy. At the same time, fluctuations began to occur with greater frequency, thereby clearly violating the classical theory.
What is the characteristic of the current crisis for the country?
Modern crises are characterized by a high rate of inflation, as a result of a sharp drop in prices. During this period, a sharp decline in production begins, accompanied by a constant decrease in business activity. The crisis is characterized by a drop in demand for the vast majority of goods and services, due to which there is a general oversupply in the market. This, in turn, leads to a rapid decline in prices, a decline in the banking sector, a halt in production and an increase in unemployment.
A gradual decline in business activity in society and a slowdown in growth rates in the economic literature is called a recession. At the moment when the deceleration passes at a critical rate, an economic recession begins. The lowest point of recession in the economy is called an economic crisis.
The consequences of the crisis for the country's economy
The economic crisis gives impetus to the future development of the economy, serving as a stimulus. The crisis prompts to reduce production costs, modernize work processes and increase profitability. During this period, the market adapts to the new competitive conditions of the economy. The onset of the crisis completes the previous cycle of the economy, starting the next, and is one of the most important mechanisms for regulating the market system of relationships.
