Recession concept. What is a recession and its role in the economy. Signs of a recession in the economy

Stagnation is a phenomenon of temporary stabilization, in which growth does not occur, but a decline in production and business activity in the national economy is not recorded either.

The phenomenon is considered fairly neutral in terms of impact, but it is a clear warning of a subsequent downturn in the economy.

Stagnation - what is it in simple words

Stagnation (Latin stagnatio - immobility) is one of the phases of the economic cycle, characterized by the absence of changes, stagnation in the production and financial spheres for six months or more.

Most often, stagnation precedes economic recession(decline in production). Low or zero growth rates of GDP (gross domestic product) reflect this phenomenon at the level of the national economy, which, in turn, during this period retains its structure and does not adapt due to local and global changes.

The classic economic cycle consists of four phases - recovery (growth), stagnation (stabilization), recession (decline) and crisis.

Any economy is cyclical and stagnation, like other phases, cannot be avoided.

With the help of government support measures and assistance from international financial organizations, for example, the World Monetary Fund, it is possible to mitigate the effects of stabilization or postpone their onset. The longer the economy develops, the longer the economy is likely to stagnate, leading to a deep recession and crisis.

Stagnation could be observed in the 1920s in the United States (before the Great Depression of 1929-1933) and in the late 1980s in the USSR.

Types of stagnation

Two types of stagnation can be distinguished - monopolistic and transitional. Ways of getting out of stagnation and measures to support and stimulate production depend on the type.

The first type of stagnation is monopolistic- appears as a result of a large concentration of monopolistic unions within the national economy. Such monopolization leads to the almost complete extermination of market competition, which is the reason for the stagnation.

Stabilization is manifested, first of all, in monopolized industries through underutilization of enterprises' capacities, an increase in unemployment, and a decrease in investment.

A way out of stagnation is possible with the help of state financial and regulatory support of enterprises that will compete with monopolists, the introduction of innovations to increase the competitiveness of products and increase demand for it.

The second type of stagnation is transitional- appears as a result of a change in the economic paradigm, for example, from an administrative to a transitional one. Such a phenomenon could be observed in the economy of the 90s in Russia - the lack of a competent plan for the transition of the national economic system and the complete disregard for the objective laws of the economy gave rise to hyperinflation, total deficit and public discontent.

Stagnation manifested itself in a sharp drop in production rates and a colossal outflow of capital from the economy. Subsequently, this affected the technical level of equipment of enterprises, the competitiveness of products and the intellectual potential of employees.

The way out of this type of stagnation is difficult and possible only in the long term - it is necessary to establish relationships with other states, finance the renewal of the fixed capital of companies, support science and develop human capital.

After you understand the economy, it is easier to deal with these difficult periods from a philosophical point of view.

At the same time, it is an important task for the country to prevent the default, which has been described, otherwise the difficult period of economic development may drag on.

What an employee can count on when downsizing in a difficult period for the economy

Reasons for economic stagnation

The main reasons for stagnation include the following:

Stagnation arises as a result of ill-conceived state policy - the emergence of monopolies, a slight decrease in production volumes and obsolescence of equipment occur gradually due to the lack of "tools" for regulating these areas.

The decrease in funding for science and the use of extensive methods in the short term is not so noticeable, but in the long term it will have a strong impact on the quality of products and the volume of demand, which will again lead to stagnation in industry and other industries.

The isolation of the national economy from other countries, expressed through a decrease in imports and exports and refusal to conclude international contracts, is another reason for stagnation. In the context of globalization, the development of one state is impossible without cooperation and interaction with other countries.

Consequences of stagnation

The main consequences of the stagnation period include:

• decrease in the rate of production and trade turnover;
• decrease in business activity;
• investment outflow;
• inflation;
• rising unemployment;
• stabilization or decline in living standards.

Stabilization in the economy leads to a drop in the rate of production and, accordingly, to a decrease in sales.

The need for workers at enterprises is decreasing, layoffs occur, and the number of unemployed is growing.

The purchasing power of the population is decreasing, demand is falling, and production volumes are decreasing. The economy enters a vicious circle, which leads to a critical rate of decline, and after a period of stagnation, a recession phase begins.

Investments from the national economy go to more successful states, the volume of financing for enterprises is decreasing. As a result, inflation (depreciation of money) is growing, which leads to higher prices for consumer goods and a decrease in real incomes of citizens. The standard of living of the population is not growing, and in some cases it tends to decline.

In general terms, stagnation is expressed in low or zero GDP growth rates (less than 2-3%).

Video - complex economic terms in simple words or what is stagnation in the economy:

Discussion (6)

A very useful and timely article, because the concept of stagnation in the Russian economy today is very relevant, and you can hear about it quite often on central TV channels. The materials clarify a lot.

For developing countries, to which Russia can be attributed, GDP growth of up to 5% can also be attributed to stagnation. Many of the signs of stagnation are present in Russia. This includes worn-out funds, underfinancing of R&D, a high degree of bureaucratization, disruption of economic ties with other countries, and a controversial foreign policy course. The way out is to establish ties with other states. This is a long and arduous journey.

Currently, in my opinion, the economy of our period is stagnating. Unjustified seizure of certain sectors of the economy by monopolists, for example, in agriculture. Large enterprises that have seized agricultural land and do not use it efficiently. Pastures, meadows, and other natural lands are not used under various pretexts, at the same time the production of beef meat is reduced to naught. For the same reason, the business activity of small businesses in agriculture has decreased, since some people have land, and the desire to work for others.

Of course, the economy has its own cycle, but the current stagnation in the country is caused, first of all, by political reasons, as well as by the focus on raw materials, so I would not wait for a quick rise

I do not agree that stagnation is a neutral phenomenon in terms of the degree of impact, because if such a phenomenon as stagnation occurs in the economy, it means that the crisis is not far off. Of course, not a single economy can do without stagnation, since this is the same mandatory stage as, for example, recovery. In my opinion, the most dangerous consequences of stagnation are the rise in unemployment and inflation. These consequences are negatively reflected not only in the economic, but also in the social sphere.

Well, in fact, stagnation is not always accompanied by an increase in inflation, but rather the opposite. To describe the phenomenon of stagnation in the economy, accompanied by significant (usually double-digit) inflation, there is the term stagflation - a nightmare for any government due to the great difficulty of overcoming its consequences and eliminating the root causes.
If we talk directly about stagnation, then this particular stage of the economic cycle does not represent anything terrible. Provided the government takes timely and adequate measures that can stop the coming consequences of the recession and crisis (since it is impossible to completely avoid them in the conditions of both a market and, to a lesser extent, a planned economy), these stages can pass with the least losses for the economy and society and gradually move into the growth phase. This is exactly what was done in the United States during the "Great Depression" (although there was a significant slide of the economy in the phase of recession). They tried to do this in the USSR under Gorbachev, but, due to ignorance of the fundamental economic principles, they failed.
p.s. A note on the philosophical attitude towards stagnation and recession (illustrated in the graph) pleased me separately.

Recently, questions regarding the state of the economy and various concepts that characterize it are especially relevant.

In general, what term to call this or that state of her is a very controversial question.

For example, Murray Rothbard, a libertarian economist and creator of the idea of ​​anarcho-capitalism, wrote back in 1969 that depression, "slowdown", recession and downturn of the economy are the same, for ideological reasons, called different words.

He may be partly right, but in modern economics, the difference between these concepts can still be traced. Before finding out how the recession differs from stagnation, it is necessary to understand the essence and characteristics of these processes.

What is stagnation?

Stagnation is (in the economy) long-term stagnation. It is expressed in a high level of unemployment, zero or low GDP growth rates, and a general decline in living standards.

The structure of the economy during its period remains unchanged, and there are no changes in the field of scientific and technological progress, because it simply does not perceive innovations. Stagnation accompanied by a high rate of inflation is called stagflation. There are no exact digital indicators that characterize the period of stagnation, but low economic growth rates, which indicate its onset, traditionally mean GDP growth of less than two to three percent per year for several years in a row.

It is necessary to distinguish between stagnation and economic crisis - a shock, sharp decline in the level of GDP. Stagnation represents an almost imperceptible growth in GDP or its absence, but not a sharp drop in indicators.

The first theory of stagnation was developed in the 1930s by the American economist Alvin Hansen.

It was he who, to describe the situation in America, introduced the concept of "secular stagnation" - secular stagnation.

The scientist believed that the US economy at that time had exhausted all the growth factors; in the future, it would not be able to get out of stagnation on its own.

To resume growth, in his opinion, it was necessary to increase government spending and allow a high level of budget deficit.

Hansen's assumptions, as you know, were not confirmed: the economy of the aforementioned country began to grow already in 1940, and his ideas were temporarily forgotten.

What is a recession?

A recession is a phase of the economic cycle, which is characterized by a slight but steady deterioration in economic performance, primarily a decline in GDP.

During its period, investments in fixed assets also decrease, unemployment rises, the standard of living of the population falls slightly, in particular those who receive income from business or wages.

In some countries, the so-called governments make an official announcement about the onset of a recession.

For example, in the United States, the business cycle committee of the National Bureau of Economic Research classifies it as a rapid decline in business activity in the economy over several months, which translates into a decrease in GDP, income, employment, retail trade and industrial production.

In the UK, a recession is determined by the National Statistical Office in the event of a decline in GDP for 2 consecutive quarters.

A well-known paradox is closely related to the definition of a recession: since usually in developed countries data on quarterly changes in GDP are published with a delay, and then can be completely revised, an official statement regarding its occurrence often comes literally a couple of months after its completion.

At the time of the announcement of a recession, two scenarios are possible:

• the country's economy is in a state of severe crisis;
• it is on the rise.

Thus, the official data on the recession is mostly of historical interest. So, forecasting GDP fluctuations is of no small importance in making economic decisions by the government.

It is also worth mentioning that in economic science today there is no consensus regarding the causes of its occurrence, as well as the methods of its accelerated overcoming.

Varieties

Economists distinguish several types of recessions - in accordance with the shape of the GDP fluctuation graph.

• V - recession characterized by a rapid and strong fall in GDP (which, however, do not reach the level of depression) with a pronounced single dip, as well as further recovery to the initial level.
• U- characterized by a rather stable and long stay of GDP at an unsatisfactory low level with further recovery.
• During W- there is a short-term increase in the GDP growth schedule in the middle - it resembles two V-recessions in a row.
• Under L- implies a rapid decline in GDP with a further smooth and long recovery.

Recession is not uncommon for the economy of developed countries. In America after the Second World War, there were more than 10 recessions, in the UK - at least 5.

With the growth of globalization, its global forms began to occur, simultaneously affecting several countries (for example, in 1998, 2000-2001, 2008-2009).

Key difference

The onset of a recession means that the economy has begun to adapt to a new state of affairs by shrinking certain activities. In this case, by trial and error, a search for a new structure for further development is carried out.

Persistent stagnation, in turn, means no adjustment occurs.... In the economic system, the same completely unpromising model is reproduced in a vicious circle. Although both of these phenomena are unfavorable, the answer to the question: “ Which is worse?". A recession of two evils is preferable as it indicates some progress in the economy.

Stagnation means a decrease in the growth rate of the country's economy as a whole or its individual segments to a value equal to zero.

The beginning of stagnation is evidenced by the decline in GDP growth to 2 - 3% compared with the previous period. The growth rate of a healthy economy should be at least 3-5%. Stagnation is considered a phenomenon that precedes the development of a crisis or is protracted. One can speak of stagnation only when there have been no changes in all spheres of the economy for several years.

The term "stagnation": what is it in simple words

Stagnation (literally from Latin - "stagnant water") is a state of the economy that is accompanied by stagnation in production and trade. It is characterized by the following symptoms:

• GDP growth rates equal to zero or close to this value, as a result, the country becomes uncompetitive;
• a decrease in the growth of nominal wages - the standard of living is falling gradually, but it is almost impossible to stop this decline;
• rising prices for essential products;
• reductions in enterprises and an increase in the number of unemployed - capital outflow occurs, organizations are less well-off;
• stagnation is long lasting.

During the period of stagnation, the economic structure remains unchanged, there is no implementation in the field of scientific and technological progress. It is very important to distinguish stagnation from a crisis state of the economy, when GDP growth is sharply reduced. Stagnation is characterized by no growth or insignificant growth in the spheres of production or trade, but not a strong decline.

If stagnation is accompanied by high inflation, then this phenomenon is called stagflation(growth of unemployment and prices at the same time).

In simple words, stagnation is a period in which there are no changes in the economy, there is no growth in production, and ultimately such a state will lead to a decline.

Types of stagnation

Stagnation manifestations are subdivided into two variations: monopolistic and transitional. Each species has its own characteristics and origin.

Monopolistic

The development of this type of stagnation is associated with numerous organizations that are not interested in competition. Such monopolists cease to produce products or provide services of proper quality. As a result, a large number of poor quality goods or services appear on the market, and the economy falls into stagnation.

Measures that can be taken to get out of this situation:

• transfer of capital outside the country, since as a result of overproduction it is impossible to use the capital formed as a result of the activities of enterprises;
• to direct free funds for the development of scientific activity, technical progress or for the implementation of public programs;
• reduce production costs;
• to increase the purchasing power of the population;
• the emergence of competitive enterprises on the market capable of fighting monopolists.

As a result, corporations will not be able to turn a blind eye to the quality of their products.

Transitional

This type of stagnation occurs when the economy gradually moves to another level. Errors in governing the country during this period will undoubtedly lead to stagnation. There is a sharp decline in production, investment activity declines, and capital outflows increase. The reasons for the development of transitional stagnation can be called:

• non-compliance by enterprises with market principles;
• decline in economic growth due to the lack of resources for development;
• lack of a competitive product, entering the world market becomes impossible.

The next stage after the transitional stagnation is recession(drop in GDP growth to zero or negative values ​​compared to the previous period).

Causes of occurrence

The stagnation in the economy is accompanied by a decline in growth in the manufacturing, investment and trade areas. This leads to an increase in the number of unemployed and a decrease in their standard of living. The reasons for this are:

• slowdown of economic processes due to the high level of bureaucracy among officials;
• insufficient level of qualifications among the management personnel and the country's leadership, which reduces the possibility of making correct and timely decisions on economic issues;
• inability to analyze the situation of past years, an incorrectly formed plan and strategy for the development of the state;
• underfunding of scientific and technical areas reduces the competitiveness of goods in the world market and production potential;
• lack of modern approaches to the development of the country;
• resource-oriented economy of the country;
• depreciation of fixed assets at industrial enterprises, reluctance of the management of large organizations to change production equipment to modern ones.

Getting out of stagnation

The fight against stagnation should be aimed at the following measures:

• introduction of new technologies, investment in efficient production projects. This approach will reduce production costs, increase labor productivity and product competitiveness. Increase sales volumes;
• encouragement of entrepreneurial activity, development of market conditions;
• provision of financial and legal assistance from the state to enterprises to create competition for monopolies;
• increasing the role of the household in the economy;
• development of the country's microeconomics - raising the standard of living of the population, its purchasing power;
• reduction of tariffs for services of natural monopolies;
• attracting foreign investment.

Consequences for the country's economy and business

As a result of a decrease in the level of the country's economy, the population may show dissatisfaction, up to rallies, riots. The mismatch between real income and constant increases in the prices of essential goods and reductions in enterprises lead to poverty. People's purchasing power is declining, they are forced to abandon many products. As a result, the volume of sales decreases, the turnover and the volume of production fall.

The economy enters a closed cycle, which leads to an even greater decline and a stage of recession. Investments are moving to other countries with more successful economies. Tax increases and penalties are often tightened. As an additional control, the country's leadership may impose ration cards or a curfew.

Another consequence of stagnation (although not necessary) is inflation... When the rise in prices for goods and services increases, and money depreciates.

How to run a business properly during stagnation

The task of a businessman is not only to stay afloat during the period of stagnation, but also to bring his enterprise to a new level and strengthen its position.

1. The main problem during the period of stagnation will be to attract new funds. An entrepreneur can obtain cheap borrowed funds in foreign countries.
2. It is recommended to suspend investing in long-term financial projects, and also not to take risks and not take part in new programs.
3. Enterprises that do not have loans will find themselves in an advantageous situation. Those who have borrowed funds should look for new sources of financing in advance. Perhaps the new loan will have higher interest rates, but without working capital, the enterprise faces bankruptcy.
4. Optimize costs. Think in advance which of the employees can be fired without harm to the business.
5. Reduce advertising costs; during a downturn in the economy, it does not bring the desired result
6. Actively search for your client.
7. Focus your business on paying customers. In a crisis moment, you should not have affairs with debtors. This approach will keep you afloat and survive stagnation. Develop a loyalty program for key customers.

The actions taken will allow the entrepreneur to strengthen and develop new relationships, improve the quality of services provided. In crisis conditions, the quality of goods or services becomes the main criterion that will allow an enterprise to function. To do this, you need to identify all the shortcomings in your activities.

Is it possible to earn during such a period

Entrepreneurship depends on the purchasing power of the population. Therefore, if you occupy a niche that is inextricably linked with the everyday life of people, you can earn money during a downturn in the economy. For example, mini-cafes, bakeries that do not require a large initial capital. The greatest success will be achieved by those entrepreneurs who are introducing a new product, non-standard ideas and looking for new connections to the market.

What to look for when doing business during a period of stagnation

When doing business during a period of stagnation and recession in production, you should pay attention to long-term mutually beneficial relationships with your customers. In such a difficult time, you need to be especially customer-oriented. Come personally and ask if the customers are satisfied with your services, in what form they would like to receive these services. This will help not only strengthen relationships with existing customers, but also find a new circle of your customers.

The company may revise the specifics of its activities for compliance with the criteria that serve as the basis for obtaining regional benefits for corporate income or property tax. In order to optimize taxes, many enterprises are transferring their activities to other regions.

At this time, it is especially important to improve the internal efficiency of the enterprise. The period after a crisis or stagnation is the best time for investment, therefore, the availability of funds in the organization is necessary.

The company should carefully monitor the demand in the market: if yesterday the product was not in demand due to the fact that the more expensive product of competitors was popular, then in conditions of stagnation, the offer of this cheaper product may turn out to be profitable.

It is important to establish relations with the state in order to receive state support at the right time.

Stagnation is a stagnant phenomenon, but this does not mean that it is impossible to do business at this time. Yes, many businesses will close before they can adjust to the new business environment. Others, with the right approach, will stay afloat, attract new customers and get out of the crisis period.

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The life cycle of the economy and business activity of any enterprise and the state as a whole consists of 4 stages: boom, peak, economic recession (recession) and complete decline (crisis).

The recession is a predetermining stage for the entire economic cycle, because there are two ways out of it: the complete decline of the country with all the negative consequences, and the search for solutions to problems with entering a new phase of economic growth.

Dear reader! Our articles talk about typical ways of solving legal issues, but each case is unique.

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Recession concept

The state of the state economy that often occurs after the phase of economic growth, and has an uncritical nature of the decline in production, is called a recession.

During this period, the main economic indicators that affect macroeconomic indicators deteriorate:

• Falling GDP indicators.
• Decrease in industrial production.
• Decrease in the income of the population.
• Decline in investment attractiveness.
• Decrease in consumer activity.

In other words, a recession is an unfavorable period for the country, during which enterprises decrease their turnover, produce fewer products, the population receives lower wages and begins to save. Due to the fact that production volumes are falling, less funds are received in the budget, which leads to its deficit.

Recession reasons

The main reasons that lead to a recession in the form of a crisis and economic downturn on a global scale are:

• The collapse of oil and gas prices, entailing economic recession in countries in which these natural resources are the main strategic product.
• Active growth in the cost of raw materials, which is provoked by the excitement and increased consumer demand.
• Issuance of mortgage loans in an unacceptable amount and with a high percentage of risk.
• Decrease in production volumes in all industrial sectors.
• Decrease in wages and other incomes of the population of the country, which entails a decrease in purchasing power.

A recession will inevitably result in a crisis or depression, and according to all the laws of the economy, it will not be possible to avoid it. But thanks to the work of specialists, analysts, economists and other higher minds of the state, this process can be significantly reduced, as a result of which the consequences of the recession will not be of such a large-scale and negative nature.

Where is the recession leading?

The recession entails negative consequences not only for the state in which the economy is in decline, but also for the entire world community. Quite often, the economy of one state is so interconnected with the economy of other developed countries that a crisis in it can lead to a global crisis and even a crash on world stock exchanges.

In international relations, a recession will inevitably lead to a fall in stock market indices. The consequence of this is the depreciation of the state currency, and there is a risk of non-repayment of the existing external debt.

On a national scale, enterprises that are forced to reduce production volumes due to inefficient consumption of products are the first to suffer.

Late payments for the delivered goods entail arrears of wages and taxes. The result of the activities of companies not ready for the crisis is the recognition of insolvency and bankruptcy.

The private consumer is also feeling the impact of the recession. It is expressed in the reduction of wages, consumer insolvency, the impossibility of making credit payments and the emergence of debt pockets.

Types

The recession, depending on the reasons that led to the recession in the economy, is of 3 types and has different manifestations:

• An unplanned recession resulting from such unfavorable factors as the start of a war, an unpredictable collapse in world prices for strategic natural resources (gas and oil). The consequence of these processes is the formation of a budget deficit in the country and a drop in gross indicators. This type of recession is recognized by leading economists as the most dangerous for the economy of the state, since it is rarely possible to predict it in a timely manner and respond with appropriate measures.
• A recession of a political or psychological nature. The reasons for the decline in production and economy are the emerging distrust of private consumers, local businessmen and foreign investors. This is expressed in a decrease in consumer activity, a decrease in the volume of financial flows from investors and a fall in stock prices, bonds, vouchers and other securities. A phenomenon of this nature can be easily overcome by restoring consumer confidence through methods of psychological and financial influence.
• A recession arising against the backdrop of deteriorating macroeconomic indicators and an increase in external debt. The consequences of this dangerous process can be a drop in the value of shares, an outflow of funds and a protracted period of many years.

Period

A recession is recognized when the period of decline in production and decline in economic performance exceeds six months and becomes protracted. The length of the recession period in economic growth directly depends on the type of recession.

For example, if we are talking about a recession in the economy of a psychological or political nature, then it is not difficult to shorten the negative period - it is enough to restore the confidence of business and the population, using loyal principles in the field of lending and social programs.

It is rather difficult to predict the period of an unplanned recession, since it directly depends on global negative factors that cannot be influenced by the state, which has a decline in production. In this case, the country's analysts can only develop measures in order to mitigate the resulting consequences as much as possible.

What is a recession in Russia and what does it threaten?

The Russian economy is directly dependent on the indicators of the gas and oil markets, and the rapid decline in prices for strategic natural resources entails the following negative consequences for it:

• Decrease in financial flows that are directed to the budget due to the sale of a strategic product.
• Against the background of falling stock indices, the ruble is weakening.
• The income of the population is declining as a result of the decline in production.
• Consumer activity is declining due to low incomes of the population and rising prices for goods and services.

In addition to these clear signs of a recession, the economic decline in Russia in 2015 is influenced by such an external factor as the sanctions of the United States and some European countries.

The rupture of relations between Russian businessmen and international companies jeopardizes the existence and development of the country's leading enterprises, and has an extremely negative effect on the GDP indicator.

According to forecasts of the country's leading experts, the recession in Russia will last until 2017, unless a strategic resuscitation decision at the level of the heads of several exporting states is made: a reduction in oil production, and as a result, a significant jump in the price per barrel.

What is a money recession?

The decline in production and decline in economic indicators has a direct impact on the currency of the state. In Russia, a recession in money is the weakening of the ruble against the generally recognized international currencies, which occurred due to fluctuations in world oil prices and a decrease in stock prices of Russian companies.

A further decline in prices for a strategic natural resource in the coming months may significantly depreciate the Russian ruble, and will require an urgent revision of the monetary policy by the Bank of Russia.

However, there are positive aspects of the depreciation of the Russian ruble. The export proceeds are accounted for in foreign currency, but the budget treasury accounts are received in rubles, which makes it possible to increase the revenue side of the state budget.

Differences between recession and stagnation

If a recession is defined as a moderate decline in the economy and production, then stagnation characterizes the complete stop of important strategic areas of the economy.

The period of stagnation has the following negative consequences for the country:

• Manufacturing and trading enterprises stop activities.
• Mass unemployment is manifested.
• The income and living standards of individuals are declining.

If, during a recession, the process of reformatting the country's economy and the implementation of plans for the further development and re-equipment of the main sectors of the state begins, then stagnation does not provide for positive changes and adaptations to new realities.

According to the old unpromising model, the country is living out the last phase of its life cycle, and falls into a deep crisis.

If we compare both phenomena, then the recession has less negative consequences, since it provides for some progress in economic growth.

Despite the fact that the recession has a negative impact on the activities of macro- and microeconomic subjects of the country, it is a barrier, passing which the economy of the state gains a tendency to growth, and the companies that have survived will face an active stage of development.

Describing the state of the country's economy, experts began to often use the word "recession", what is it in simple words, how is it different from stagnation, crisis? Let's try to figure it out.

The Latin word "recessus" is translated as a retreat. It is used to determine the phase of decelerated economic development, which occurs after the recovery phase and precedes the state of crisis or depression. The amount of production and consumption of products is decreasing. A slowdown in economic growth leads to negative or zero dynamics of the gross domestic product.

The recession process, according to experts, is natural. The economy of any country has a cyclical nature () and periodically goes through 4 phases, following one after another. A rapid rise is followed by a period of stagnation, then an economic recession, and at the next stage - a depression.

According to statistics, approximately 10 to 20 years pass from one phase to another. Often a recession precedes the onset of a crisis situation, but timely measures 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 evidenced by an increase in inflation by 3-4%, and the activity of other indicators warns of an impending economic depression.

11 typical reasons for the slowdown in economic processes:

1. Falling value of natural resources.
2. Unexpected changes in economic sectors.
3. Reduced income due to inflation.
4. Decrease in the volume of foreign investments.
5. Monopoly and high taxes.
6. Savings depreciation.
7. Transfer of private capital to banks in other countries.
8. Impact of international sanctions.
9. Implementation of innovative technologies.
10. The problems of the credit and financial sector.
11. Devaluation.

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, like a swing, grows and falls,
• W, when in the middle of the recession there is a short-term development of GDP,
• L with a rapid decline in GDP, followed by a smooth recovery stage.

How dangerous is the economic downturn

As a result, the national currency of the country is depreciating, prices are rising and the population is dissatisfied with the decline in living standards. To improve 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 that can turn into depression and crisis.

Almost all states experienced such a crisis situation in 2008-2009. In 2014, China's GDP grew by 7.4%, America's 4%, Russia's 0.6%, and global GDP 3.2%. In 2015, in addition to Russia, negative economic development was observed in 15 states.

How long will it last and what will be the consequences? Independent analysts predict that the current difficulties in Russia will have to be overcome throughout 2016. No one runs the risk of predicting an upward movement of the economy or depression, because many unpredictable factors are involved in the process.

Stagnation and the onset of a crisis can only be prevented with the help of public administration. The implementation of state programs to attract investment, support industrial sectors, stabilize the exchange rate can have a positive impact on the development of economic processes. The recession can be managed and predicted. Only inaction and wrong policy lead to the onset of 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 the crisis.
... Problems with cyclical economic recessions are quite solvable, so you just need to take additional measures to improve your well-being. Find sources of additional income using handicraft skills, land or investment.