What is economic recession and stagnation. What is a recession in the economy? What is a recession in Russia and how it threatens

Recession translated from Latin Recessus means retreat. The phase of the economic cycle that occurs during the recovery and is the predecessor of the depression and crisis in the economy is called a recession. The recession, as a phenomenon, slows down the rate of state economic growth, its manifestations and is observed in a moderate decline in production or negative and zero dynamics of GDP growth.

The concept of a recession in the economy and macroeconomics is interpreted as a moderate decline in production, which is not critical for reducing the rate of economic growth. With a fall in production growth for six months, the size of GDP is at zero or drops to a negative value.

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It is almost impossible to predict a recession, but with the right government measures it can be reduced. The development of a recession can become the source of a serious economic crisis.

The business cycle represents regular changes in the level of production, including employment and profits. The duration of one business cycle ranges from 2 to 10 years. The economic cycle is a single process that consistently passes through the periods of functioning of the economy, they differ in the direction and level of activity.

There are such phases of the economic cycle:

Crisis, aka recession

Subsequently, economic equilibrium is disturbed. A crisis arises after a recession - production growth is accompanied by a recession. A crisis condition occurs subsequently, a decrease or decrease in the volume of manufactured products; in especially difficult situations, a reduction in work entails the destruction of the productive forces.

In a market economy, a production crisis most often occurs, it negatively affects the sale of goods, a fall in prices and production volume. A decrease in the volume of production subsequently, the remainder of unsold inventories, a decrease in production, a drop in demand for labor, a decrease in profits, a decrease in creditworthiness and a slowdown in the growth of prices for manufactured goods and services are factors of the recession.

The production crisis due to the insolvency of the enterprise leads to bankruptcy.

Depression

Follows the crisis. During a depression, there is a gradual sale of surplus products, sales of products are resumed and production volumes increase. The economy is in a stagnant state, the decline in GDP stops.

The resulting free capital is integrated into banks, which expands the possibilities of providing loans. Gradual economic growth during the depression phase precedes economic recovery. At this phase, organizations are faced with the main task - to increase profits, during the crisis there was a reduction in costs.

Revitalization

It is the latest level of economic downturn. During the recovery phase, there is a gradual expansion of reproduction and a return to the level of the pre-crisis state.

The rise or expansion is accompanied by the active development of the economy. Expansion implies an excess of production volumes that were before the crisis. The rise is accompanied by an increase in the price level, a decrease in unemployment, an increase in loan capital and attraction of investments.

The main phase of the economic cycle is the crisis (recession). The crisis accompanies the end of one development period and precedes the emergence of a new cycle, thus, there is a cyclicality. During a crisis, the entire rooted scheme of reproduction is destroyed and a new, more developed system is created. The mechanism of falling prices during a recession leads to falling stock prices, interest rates, reduced profits, and bankruptcy.

The crisis excludes the overaccumulation of capital by means of depreciation of funds, which stimulates the renewal of production and the improvement of technologies.

Causes and types

An economic crisis can subsequently arise for many reasons, some of which are the following factors:

1. A recession can arise from unplanned global changes in market conditions. Events affecting changes in the world economy can be wars, natural disasters and sharp fluctuations in the value of natural resources (gold, oil, coal, etc.).
2. A sharp drop in sectoral industrial production leads to a recession.
3. A recession can arise from a decline in the purchasing power of the population. A decrease in the level of income leads to a decrease in sales volumes resulting in a decrease in production volumes.
4. The recession can be caused by the collapse of the national economy. Most of the state capital is made up of investments by private entrepreneurs. Accordingly, a decrease in the level of investment leads to a state crisis.

There are three types of recession depending on the causes of occurrence:

1. Under the influence of changes in market conditions- with very sharp changes in world economic conditions, the prerequisites for which are wars and a decrease in the price policy for natural resources, there is a risk of a recession. Such conditions are very dangerous, since they are not typical and do not lend themselves to analysis and forecasts.
2. Political and social aspects, as the cause of the recession, are less dangerous for the economy, since they are amenable to regulation and elimination. Such reasons include a decline in consumer confidence, a decrease in investment and a decrease in business activity.
3. Loss of economic equilibrium, during which debt liabilities increase and there is a rapid drop in quotations in the markets, it also leads to a crisis.

Effects

The main consequences of the recession in the economy include:

• decline in production volumes;
• the collapse of financial markets;
• decreased creditworthiness;
• increase in unemployment;
• reduction in the level of income of the population;
• falling GDP;

The most critical consequence of the recession is the economic crisis. The production downturn leads to job cuts. Lack of money and unemployment leads to a decrease in demand for manufactured products. Unsold goods create unnecessary inventory costs.

The enterprise, upon the formation of a surplus of production, reduces the volume of production. Citizens have debts on loans, as a result of which the policy of lending to legal entities and individuals is becoming more severe, and investment in the research industry is reduced. There is a collapse of the securities market - shares are significantly cheaper.

This is followed by inflation and a decrease in the purchasing power of the population. The state is trying to deal with the situation by increasing its external debt by taking loans. In general, the national level of reproduction and GDP are declining.

Economic stability is achieved only after many years of work; the main criterion for avoiding a crisis is forecasting and regulating recessions.

Historical example

History knows several examples of recessions that affected entire groups of countries around the world. Thus, in the 1990s, the global financial crisis affected the economies of the countries of the European Union, Latin America, Southeast Asia and Russia. A clear example of the financial and economic recession that has affected almost the entire world economy is the global crisis that began in 2008.

2006 saw the collapse of the US mortgage system. Over time, the crisis engulfed the banking and financial systems of the state. By the beginning of 2008, the crisis had acquired a worldwide character. The impact of the crisis was reflected in a decrease in the scale of production, a decrease in the level of GDP, and an increase in unemployment. Several countries, including Russia, have reduced lending to a minimum. In Russia, the global crisis has led to the bankruptcy of many banking organizations, large firms and a decline in the living standards of the population.

The global financial crisis has affected the economies of developed and developing countries. World practice has shown that the most important task of any state is to ensure financial stability and prevent recession.

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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Optimal conditions for opening and maintaining a current account for entrepreneurs

This term comes from the Latin word stagnum, meaning "stagnant water". This economic period is characterized by stagnation in production and trade, an increase in unemployment and a decline in the standard of living of people due to insufficiently high wages. The economy, as it were, freezes, becomes immune to innovations, the progress of science and technology. Economics students study stagnation by looking at the economic state of the United States in the 1930s. Another typical example of a "stagnant" period is the economy of the USSR in the late 1980s. Academician O. Bogomolov claims that it was the stagnation period that marked the beginning of perestroika.

Market stagnation

Stable, unchanged, market situation without an increase in sales volumes - this is the stagnation of the market. That is, in order to reach a stagnation state, the market just needs to stop growing. As soon as market growth stops, inflation, which was previously compensated by the increase in the number and turnover of sales, ceases to be compensated. Everything gradually falls into decay. Therefore, a stagnation period is always followed by a recession - that is, a fall. The financial crisis ends this chain. As a rule, only those states that refuse to artificially build up markets can recover from this crisis.

Stagnation period

The most striking example of economic stagnation is the situation in the United States market in the late 1920s - early 30s, after the so-called Great Depression. It was then that this term appeared - it was introduced by an American economist by the name of Hansen. The end of the Soviet era was also marked by the “freezing” of market processes and even the appearance of the expression “Brezhnev's stagnation”. This time is associated with the lack of goods in stores and many kilometers of queues. As for modern Russia, at the recent forum in Davos, where the prospects for the market in 2016 were discussed, A. Kudrin said that the period of stagnation in our country could well be overcome.

Economic stagnation

What synonyms have not invented this term over the past 100 years - "freezing", "swamping", "timelessness". But, in fact, all this is the stagnation of the economy. Experts argue that no matter how hard the leadership of the state tries, this period still cannot be avoided: any economic model is cyclical and develops according to the following algorithm:

1. Climb.
2. Stagnation or stabilization.
3. Recession.
4. A crisis.

Thus, economic stagnation is just one inevitable stage in the development of any country on our planet. It is impossible to prevent it and stay in the growth stage forever, but you can prepare for it in advance.

Stagnation in Russia

The first pronounced stagnation in Russia occurred immediately after the collapse of the Soviet Union. It was a transitional type of stagnation when the country tried to integrate into the new free market model. The work of production stalled, agriculture went into decline, and a sharp outflow of intellectual resources abroad began. It took a long time for the economy of our country to recover and competitive goods appeared on the market. As for the current situation, according to Alexei Kudrin, who is considered one of the best finance ministers in the entire history of the Russian Federation, "the moment for restructuring the country's economy has not yet been missed."

Social stagnation

There is not only stagnation in the economy, but also the so-called social stagnation. The American Dictionary of Sociology defines it as follows: "The period when society is" marking time ", socio-political life stops, and no factors are foreseen for changing people's lives." This is a rather difficult period, which is characterized by:

• Stopping the development of the country's culture and art.
• Mass humiliation of certain categories of the population or an entire people, deliberately organized by the authorities (the most tragic example is the genocide of the Jewish people during World War II).

Organization stagnation

Production can "stall" on the scale of not only the whole state, but also a single enterprise. In this case, the following processes occur:

• The quality of manufactured products decreases
• Sales turnover is falling
• Technical resources are idle, not fully utilized
• The products cease to be competitive in the market and lose to their analogues: they become not modern, not fashionable, etc.

Organizational stagnation can only be overcome from within. It is necessary to restructure production models, revise business plans, improve the ideological component and re-motivate the team.

Reasons for stagnation

It is impossible to quickly prepare for economic stagnation after seeing its forecast in the news - its preconditions are too complex and varied. In April 2016, the Svoy Business portal published a study on this topic, highlighting the following reasons for stagnation:

1. Bureaucratization of government agencies. There is a growing number of employees whose jobs are essentially useless. Service becomes more complicated, the administrative apparatus is detached from the needs of the population.
2. Corruption as a state. apparatus and business areas.
3. Lack of investment in research and development.
4. Gradual failure of production equipment.
5. Break of external trade relations.

Types of stagnation

Economists identify the following types of stagnation:

• Monopolistic
• Transition

In the first case, monopolies, reigning in the market, "crush" small business. Production stands idle, unemployment arises on a massive scale. History shows that the way out of this situation is the accumulation of the achievements of science and technology and the export of capital outside the state. Another stagnation of the economy - a transitional one - is caused by the change of the command-administrative market model to a free one. The country is no longer of interest to investors, the national economy suffers, and vast fields stand unopened. In this case, experts say, the economy will face an inevitable recession, depression, and only then - gradual growth.

Consequences of stagnation

As a rule, the consequences of stagnation are dire. Almost always observed:

• Decrease in production rates and, as a result, fall in prices for natural resources
• Loss of workplaces by employees of enterprises
• Extremely low purchasing power of the population
• Stopping intellectual work and research activities
• The looming crisis of enterprises in virtually all business sectors

The most predictable consequence of stagnation is a recession, which, at best, will keep production at zero, and at worst, will lead to negative GDP.

What is stagnation in the real estate market?

Stagnant processes can affect both the market as a whole and its largest industries - for example, such a colossal sphere as the sale and purchase of housing. So what is stagnation in the real estate market? This is a situation in which the intensity of the sale and purchase of apartments and houses decreases compared to the same periods in previous years. There is a demand for housing, but the supply does not keep pace with it, since the construction is not taking place. The latest example is the Russian situation in 2015: due to the external political "blockade" of our country, there was a long stagnation in the market of both new buildings and secondary housing.

What is ruble stagnation?

Ordinary citizens without economic education are often interested in what is the stagnation of the ruble? First of all, let's say that the state of the currency is a mirror of the country's economy. If the national monetary unit does not develop, this means stagnation in the economy of the state itself. And vice versa: economic growth significantly strengthens the domestic currency and its competitiveness in the world arena.

In recent years, the Russian currency has been depreciating, while inflation has been rising. Typical example: in the first 3 quarters of 2014, the ruble depreciated by an average of 35%. Recently E. Nabiullina said that the Central Bank expects that by the end of 2016 the national currency will strengthen, and the inflation rate should not exceed 6%.

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.

Recession is, definition

A recession is decrease in productivity, which characterizes zero or negative main indicator of GDP - gross domestic product, flowing for six months or more.

This is a relatively moderate, uncritical drop in business activity, production, and a slowdown in economic growth, usually defined as a consistent decrease in the real gross national product.

- this is in the economy, this term means a slowdown or decline in the growth rate of gross production.

A recession is one of the phases of the economic cycle, which always follows the period of economic recovery, accompanied by the achievement of the peak point of business activity, and precedes the phase of economic crisis and depression.

A recession is reduction Gdp for two or more quarters, that is, roughly speaking, a situation where all factories began to produce fewer goods than before, shops sell less and consumers buy less.

A recession is a significant reduction in business activity, which may be accompanied by a number of negative factors for the economy.

A recession is transition period between boom and depression, and if we rely on the classical definition of a recession, then this is zero economic growth (zero GDP growth) for six months.

Recession (from Lat.recessus - retreat) is such period in the economy, when the main indicators (especially GDP - ed.) have been falling for two quarters, but this decline is not critical.

Recession concept

The concept of recession is intended to accompany a logical wave of recession on the graph of economic growth of a territory.

A recession is one of the phases of the economic cycle () following a boom and alternating depression.

A recession most often leads to massive falls in stock indexes. As a rule, the economy of one country depends on the economy of other countries, so an economic downturn in one country or another can lead to a decline in economies in other countries and even to a crash on world stock exchanges. Many other signs of cyclical crises are also inherent in recessions, such as rising unemployment.

A recession can occur under the influence of the transformation of the economy of industrially developed countries at a new stage of scientific, technical and socio-economic progress, or in connection with an increase in prices for, in particular.

"This is a failure of the existing financial system, the result of poor quality of regulation, due to which huge risks were left out of due consideration. These are colossal imbalances that have accumulated in recent years. First of all, between the scale of financial transactions and fundamental cost assets, between the increased demand for credit resources and the sources of its support. The system of global economic growth itself gave a serious breakdown, in which one center prints and consumes goods practically without restrictions and uncontrollably, while the other produces inexpensive products and saves issued by other states money... I will add that in such a system, entire regions of the world, including partly even prosperous Europe, found themselves on the periphery of global economic processes, and therefore outside the framework of making key economic and financial decisions. In addition, the generated wealth was distributed very unevenly both within countries, between segments of the population, and this applies even to highly developed countries, and between different countries and regions of the world. For a significant part of humanity, comfortable housing, education, and high-quality medicine are still inaccessible. And the world upsurge of recent years has not radically changed this situation. Finally, this one is also a product of inflated expectations. The appetites of corporations for the ever-growing demand were unjustifiably inflated. The race of stock indexes and capitalization has apparently begun to dominate the increase in productivity and real efficiency of companies. Unfortunately, overestimated expectations were not limited to the business environment. They set the rapid growth of personal consumption standards, primarily in developed countries... Growth, which - and this must be admitted frankly - was not supported by real opportunities. It was not earned prosperity, but prosperity on loan, at the expense of future generations. All this “pyramid of expectations” had to collapse sooner or later, which, in fact, is happening before our eyes. ”V. Putin, from a speech in Davos, January 2009

Recession is

On the terms "recession", "economic collapse", "depression" and " financial crisis»

Murray Rothbard, a well-known economist-economist of the mid-20th century, gave a successful interpretation of the terms, which are similar in nature:

In the old days, we suffered from periodic economic crises, the sudden onset of which was called "panic", and the protracted onset of panic was called "depression." The most famous depression of modern times is, of course, the one that began in 1929 with a typical financial panic and continued until the outbreak of World War II.

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After the catastrophe of 1929, economists and politicians decided that this should never happen again. To cope with this task successfully and without much hassle, it was only necessary to exclude the word "depression" from the use. From that moment on, America no longer had to experience depression. For when in 1937-1938 came another severe depression, economists simply refused to use this terrible name and introduced a new, more euphonious concept - recession.

Since then, we have experienced many recessions, but not a single depression. However, pretty soon the word "recession" also turned out to be quite harsh for the sophisticated feelings of the American public. Apparently, the last recession was in 1957-1958. Since that time, we have had "recessions", or even better "slowdowns" or even "deviations".

US economic recession

The head of the Federal Reserve System (Ben S. Bernanke) said that in 2008 there will be no recession. At the same time, according to him, risk the economic downturn persists, in connection with which the country's authorities will consider measures to prevent it. Immediately following the results of the April meeting Fed noted that the rate of economic decline has slowed down, although it continues. But then they did not dare to tell the whole truth.

In turn, economists of the American investment bank Merrill Lynch note that such indicators as the deterioration of the situation with unemployment, which reached 5% in the United States in December 2007, as well as decline sales of retail chains clearly indicate the beginning of a recession. It turned out that the fall in USA will be deeper, and the rise in unemployment may be stronger. The deterioration of the forecast is a sad fact for the entire world community, since it is the economy of the United States of America that is considered the locomotive that will drag from the swamp crisis all other countries.

Largest in USA the investment bank also expects the US economy to recession in 2008.

The impact of the recession on large organizations

It is important to understand that a recession affects some business groups in different ways, and may affect others in a completely different way. Naturally, all types of business - from small to joint-stock companies - will have a negative effect, but some firms the recession will simply erase, while others will touch only marginally.

So let's take a look at the imaginary scenario organization K, which is a large industrial structure, and which tries to do business and carry profit during a recession.

All processes, of course, are much more profitable than described in the article. Everything is confusing and very complicated; This article only sketches all the negative effects of the recession.

When a recession hits, a company drops in volume sales.

The organization's management will try to find ways to return the previous profit... They will start to stop hiring new workers, or hiring may simply decline.

To reduce costs, the organization will spend less on advertising, research and the purchase of new equipment. Also, the production of new products that do not yet bring the desired profit may stop. All of these actions, in turn, will affect Company K's partners, such as advertising firms, equipment manufacturers, and the like, as theirs will decrease.

How the recession affects dividends and stocks

When the time comes to publish the financial report, it will show that the profit of the organization is falling. Such news will immediately affect the price of the company's shares, the profit will immediately begin to fall. As a result of a decrease in profit, it can reduce the payment of dividends, or stop paying them altogether.

The board of directors and shareholders of the organization can appoint a new executive team (i.e. directors). It is also likely that the advertising department will be reorganized to accommodate the new economic situation.

An important aspect of a fall in the share price is that institutional investors will sell shares of firm K when they see it fall in value. They will simply choose a more promising organization and transfer money into it. But you need to understand that institutional investors (banks, state. institutions) operate with large blocks of shares, and therefore the sale of their blocks of shares in company K will lower the share even lower.

Non-payment, indebtedness, .

Accounts receivable is a very important item in a firm's balance sheet, which describes the overall indebtedness from clients, partners, etc. During a recession, accounts receivable will increase as debtors of the organization will pay their loans with a delay, not in full, or not paying at all.

The escalating accounts receivable, in turn, will affect the company's ability to repay its debts to creditors. As a result, the attractiveness of the organization in the credit market will decrease, i.e. its bonds will become unattractive and risky, and large creditors (banks) will not lend to the company due to distrust in the payment of debts.

But not only can a small business stop making a profit for its owners, it can also affect the welfare of the community or the area in which the profit operates. Grocery stores and households. Goods, beauty salons, dentistry, household services (ateliers, workshops, etc.) - all these are small enterprises provide residential areas with essential goods and services. If they disappear, then the residents of the area will not come easily.

It should also be noted that the spirit of entrepreneurs, which motivated young specialists to take various actions to start and develop a business, will begin to disappear. When potential startups see a business as a risky venture during a recession, they will shy away, which in turn will lead to unrealized neighborhood amenities. workplaces, not received money, etc., which contributes to the development and aggravation of the recession.

There will be development after the recession.

Recession is temporary. Each recession is followed by a new stage of economic development, i.e. development. This is the stage at which the smartest, brazen and most adventurous become millionaires.

The recession negatively affects all types of business. Despite the fact that there are a number of methods to deal with the recession, it will still be bad for both large companies and small businesses. But it's important to remember that a recession is followed by a developmental stage during which you can work hard and become rich.

Recession in the Russian Federation

Ministry of Economic Development of the Russian Federation to the Ministry of Economic Development announced the beginning of the recession in Russia. By data MED, there is a big recession industrial production index and the economy, and GDP growth for the year will be lower than the planned 6.8%.

The deputy head of the Ministry of Economic Development of the Russian Federation, Andrei Klepach, announced the beginning of a recession in the country. There will be a serious drop in the fourth quarter, he said. industrial production and the economy as a whole. “The big recession began in October and will be in November-December,” Klepach said, noting that there is no data yet on the November index of industrial production.

And by the end of this year, GDP growth will be lower than the expected 6.8%, and industrial production will grow by only 1.9% instead of 4.7% forecasted earlier. “The figures are being specified now, but they will be somewhere around (1.9%) due to a very large decline in production in November-December,” the deputy minister confirmed.

Forecasts ministries for GDP growth and industry, and inflation next year, Klepach refused to voice it, noting only that the calculations are still being clarified.

Ministry of Economic Development of Russia Of the Russian Federation of Russia at the end of November forecast GDP growth in 2008 to 6.8-7% percent. According to the statistics of the Ministry of Economic Development, the growth in the first ten months of this year was 7.5%, but in October the spread of crisis phenomena to the real sector of the economy became noticeable, the ministry's document said.

The main source of the slowdown in growth was the decline in metallurgical and chemical production, the production of electrical equipment, electronic and optical equipment, the production of building materials and a number of others.

According to forecasts by the Ministry of Economic Development of the Russian Federation of the RF RF, inflation in the Russian Federation by the end of 2008 may exceed 13%.