stagnation and recession. Stagnation - what is it in simple words and what to expect from it? Differences between recession and stagnation

A recession is a negative trend in macroeconomics (national economy), often preceding a crisis. This phenomenon is cyclical and is inevitable for any economic system.

What is a recession in the economy

Recession (Latin recessus - retreat) is a concept in macroeconomics, denoting a drop in production rates over a long period (from six months or more).

The process is characterized by zero or negative dynamics of GDP (gross domestic product). A recession entails a decrease in business activity, a slowdown in economic development. The contraction of GDP is understood as a decrease in the volume of production of goods and a decrease in the volume of consumption.

A recession inevitably follows an upturn (a boom in production), which is explained by the cyclical nature of any economic system.

In general the economic cycle consists of four phases- growth (rise), (stabilization, lack of any dynamics), recession (fall) and crisis (depression).

The duration of the economic cycle in the modern global world is 10-15 years, which can be tracked by the global financial crises of the 70s, 90s and the last global crisis of 2008-2009.

Causes of a recession in the economy

There are several main causes of recession, depending on the level of development of the economy.

For resource-based economies, the decline in prices for oil, gas and other exported minerals is the reason for the decline. The price of raw materials falls, the budget receives less revenue, there is a deficit that needs to be compensated somehow.

To compensate, tax rates are raised, spending on social needs (education, medicine, etc.) is reduced. Such actions further exacerbate the decline in production.

In developed (industrial and post-industrial) states, a recession manifests itself as a result of a change in the technological structure, for example, due to the emergence and development of information technologies.

The technological order is understood as the level of development of technology and technology, the main directions of development of scientific and technological progress.

These reasons for the emergence of a recession cannot be influenced, they arise due to the objective laws of the economy, therefore, a recession at the level of a single national economy will occur sooner or later.

A recession in one state can lead to a recession in other economies, which will lead to a global crisis.

There are reasons that arise under the influence of market participants. The recession in the economy may be caused by problems in the banking sector.

For example, commercial banks have issued too many loans that are not repaid. Then financial institutions are forced to raise rates, raise funds in the foreign and domestic markets. In a situation where there are too many such banks, the number of loans issued falls, therefore, enterprises cannot borrow money and, in the absence of funds, stabilize or curtail production.

Because of this, unemployment is growing, the population and companies do not repay loans, banks are tightening rules, the situation is entering a vicious circle and getting worse.

Force majeure circumstances, such as a war or a sharp change in energy prices, can plunge the economy into a recession phase. The way out of stagnation is possible only with the participation of the state, which will “inject” money into the economy, supporting various industries and stabilizing the national currency.

The consequences of the recession

The main consequences of a recession in the economy include the following:

• decline in production volumes;
• collapse of financial markets;
• decrease in the volume of loans issued;
• growth in interest rates on loans;
• rising unemployment;
• decrease in real incomes of the population;
• falling GDP.

The most powerful and the critical consequence of a recession is an economic crisis. Due to the decline in production, the need for jobs and the number of workers is decreasing. This entails a wave of layoffs and rising unemployment. People begin to consume less, which leads to a decrease in demand for products and an increase in the decline in production.

The debt of citizens and organizations to banks is increasing, which, in turn, are tightening the procedure for issuing loans. The volume of lending to individuals and legal entities is decreasing, the volume of investments in industry and science is decreasing, and scientific and technological development is slowing down. The decline in production is followed by a collapse of the securities market - the shares of large industrial enterprises are losing sharply in price.

These events are followed by the depreciation of money - inflation, further price increases and a decrease in real incomes of the population. Which ultimately leads to dissatisfaction and a decrease in the quality of life.

The state is trying to find funds and increases the external debt. In the absence of a sufficient amount of finance, current loans have to be refinanced and new ones taken.

All of these consequences are reflected in one indicator - the decline in GDP (gross domestic product), which directly depends on the volume of production within the country.

Discussion (10 )

It should be noted that the recession, although an inevitable process, but certain factors can contribute to it. What can be called today is the negative economic situation around the world, and sanctions can only raise production figures.

The sustainability of the country's development is characterized by the successful development of fundamental and applied sciences, the ability to manage effectively (professionally), owning the processes of creating and introducing technologies into production. Professional work to improve the quality of human life, the prestige of the state. Suggest, friend, who among us possesses such a capacity?
Hint: less emphasis on the boblo ... . Creativity is the most effective means of getting results!

A recession is a rabble of charlatans in power. These are not economists, here there is a conspiracy of officials and who are tasked with destroying Russia. And also to create such conditions under which Russia should remain in bondage to foreign banks. Let me give you an example: I have not been allowed to set up a single manufacturing facility for the last 29 years. And now the population of my city is almost all unemployed, living on the pensions of the elderly. In 10-15 years, Russia's external debt will amount to several tens of trillions of dollars. The Government and the State Duma are occupied with one issue: how to increase the receipt of funds in the country's budget. An increase in taxes will not give results; on the contrary, it will follow, the closure of production, in the cities, housing and communal services will become worthless; there will be no funds for the restoration of infrastructure. Customs and border services, which are now helping to fill the budget, will be reduced in the future, since there is no currency to buy goods abroad, etc. I consider first of all to create, while there are funds, the Presidential Fund, which would point-wise direct funds for the opening and creation of new production facilities for the production of products, as well as products that would be exported. In no case do not allocate funds to already open productions. There is a saying that they shoot an old horse. Entrepreneurs who would like to create a production must submit a crude project for the opening of production and, together with the Presidential Fund, bring this project to a ready-made full-fledged enterprise. If, in the event of the termination of an individual, he was engaged in entrepreneurial activity, the property that was built at the expense of the Presidential Fund should be transferred or re-profiled into another type of activity. Upon full repayment of the debt to the Presidential Fund, the property becomes the property of the entrepreneur. Entrepreneurs are prohibited from taking loans from other banks secured by property owned by the Presidential Fund. Allow the subjects of the Russian Federation to transfer land from federal to urban use and simplify this procedure. P.s Well, something must still be done, or the whole country will switch to doshirak.

Sergey, alas, all economies, even the most successful ones, have ups and downs. There are many reasons for this. A good economy differs from a bad one by a shallower recession and a shorter duration.

1. Today's crisis in the economy is the work of accountants Selu-Lu Liu from the economic bloc. Accountants who can only distribute the country's budget a priori cannot develop the country's economy, since they do not understand how to develop the economy.
2. If you are engaged in cyclicality in the economy, then it is foolish to expect that after the rise you and your economy will not fall into a hole after the rise, and the higher your rise is, the deeper your fall hole will be.
3. A good economy has no cyclicality and is in almost equilibrium, for this, any economist can see what gives rapid growth to a non-economic sector that affects the economy, or to the industrial sector in order to prevent overproduction. The economist will determine how to do so that there is no sharp growth in this sector, which creates instability in the economy.

A recession is a harbinger of a crisis. In our country, it is currently provoked by the price of energy resources (oil and gas), financial sanctions of partner countries that wanted to avoid the crisis at the expense of individual countries and regions, trade sanctions on the export of imports for our enterprises, financial credit sanctions, accelerated repayment of loans to foreign banks and the inability to obtain new ones, the confusion of the foreign exchange market and the decrease in the circulation of foreign currency, especially the US dollar, the conduct of hostilities and the political pressure of other states. All this increases the country's responsibility for the development of its own production, moving away from the commodity market, import substitution, strengthening the role of its own currency within the country and reducing the influence of foreign currency on its own economy. I think so.

I would also like to read about ways to fight and get out of the recession. Personally, offhand, I can name two ways.
The first is the US policy during the Great Depression (late 20s - mid 30s), namely, an increase in government spending as part of large-scale financing of the construction of large infrastructure facilities (fighting unemployment), regulation of healthcare and education, ensuring a living wage, devaluation dollar. These measures, although not immediately (somewhere in 5 years), returned both the IPI and the unemployment rate to the “pre-depressive” level.
The second method is the policy of, for example, Saudi Arabia and other states of the Persian Gulf, which, having significant reserves available, can afford to neutralize the consequences of the recession in the economy at their expense by pumping funds into the artificial support of consumer demand (subsidies, unsecured salary growth etc.) instead of investing in the real sectors of the economy. By the way, Russia also used this method in 2008. Its drawback is obvious - the recession syndromes are cured without eliminating its root cause, namely, the inconsistency of the economic model with the realities of the surrounding world.

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 a decrease in GDP growth to 2-3% compared to 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 of a protracted nature. One can speak of stagnation only when there are 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, which is accompanied by stagnation in the sphere of production and trade. It is characterized by the following features:

• 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 falls gradually, but it is almost impossible to stop this fall;
• rising prices for basic commodities;
• reductions in enterprises and an increase in the number of unemployed - there is an outflow of capital, organizations are less well off;
• stagnation is prolonged.

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

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

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

Types of stagnation

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

monopoly

The development of this kind 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 goods or services of poor quality appear on the market, and the economy falls into stagnation.

Steps you can take 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;
• direct free funds for the development of scientific activity, technical progress or for the implementation of public programs;
• reduce production costs;
• increase the purchasing power of the population;
• the emergence of competitive enterprises on the market that can fight monopolists.

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

Transitional

This kind of stagnation occurs when the economy gradually moves to another level. Mistakes made in governing the country during this period will undoubtedly lead to stagnation. There is a sharp decline in production, investment activity is reduced, capital outflow increases. The reasons for the development of transitional stagnation can be called:

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

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

Causes

The stagnation in the economy is accompanied by a decrease 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 in economic processes due to the high level of bureaucracy among officials;
• insufficient level of qualification among the managerial personnel and the leadership of the country, 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 on 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, unwillingness of the management of large organizations to change production equipment to modern ones.

Getting out of a stagnant state

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

• introduction of new technologies, investments in efficient, production projects. This approach will reduce production costs, increase labor productivity and competitiveness of the product. Increase sales volumes;
• encouragement of entrepreneurial activity, development of market conditions;
• providing financial, 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 the services of natural monopolies;
• attraction of foreign investments.

Consequences for the national economy and business

As a result of a decrease in the level of the country's economy, the population may show discontent, up to rallies, riots. The mismatch between real income and the ever-increasing prices of basic commodities and layoffs in enterprises leads to poverty. People have reduced purchasing power, they are forced to abandon many goods. 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 fall and a recession stage. Investments are moving to other countries with more successful economies. Often there is an increase in taxes and tougher penalties. As an additional control, the country's leadership may introduce ration cards or a curfew.

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

How to run a business during stagnation

The task of a businessman is not only to stay afloat during a 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 the attraction of new financial resources. An entrepreneur can get cheap borrowed funds in foreign countries.
2. It is recommended to suspend investing in long-term financial projects, as well as not to take risks and not take part in new programs.
3. Enterprises that do not have loans will be in a favorable situation. Those who have borrowed funds should seek new sources of financing in advance. Perhaps the new loan will have higher interest rates, but without working capital, the enterprise is threatened with bankruptcy.
4. Optimize costs. Think in advance which of the employees can be fired without harm to the business.
5. Reduce advertising costs, with a recession in the economy, it does not bring the desired result.
6. Actively look for your client.
7. Focus your business on paying customers. At a time of crisis, dealing with debtors is not worth it. This approach will allow you to stay 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 the enterprise to function. To do this, you need to identify all the shortcomings in your activities.

Is it possible to earn in 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 even during a downturn in the economy. For example, mini-cafes, bakeries that do not require large initial capital. The greatest success will be achieved by those entrepreneurs who introduce a new product to the market, non-standard ideas and are looking for new connections.

What you should pay attention to when doing business in a period of stagnation

While doing business during periods of stagnation and decline in production, it is worth paying attention to long-term mutually beneficial relationships with your customers. In such a difficult time, you need to be especially customer-oriented. Personally come and ask if 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 customers.

The company may review the specifics of its activities for compliance with the criteria that serve as the basis for obtaining regional benefits for income tax or corporate property. Many enterprises in order to optimize the tax transfer their activities to other regions.

At this time, it is especially important to increase the internal efficiency of the enterprise. The period after the crisis or stagnation is the best time for investment, so you need to have money in the organization.

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 obtain state support at the right time.

Stagnation is a stagnant phenomenon, but this does not mean that it is impossible to do business during this time. Yes, many enterprises will close, not having time to adapt to the new conditions for doing business. 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

In the modern world, economic issues come under the close attention of society. After all, the well-being of each individual or legal entity depends on the state of the organization of the national economy. Therefore, even without being economists, many people are interested in what stagnation and recession are.

There are also many other categories worth considering. Each person will be able to understand their differences and navigate the economic reality that surrounds them.

What is stagnation?

To understand the difference between a recession and stagnation, one should consider each of these economic categories in more detail. Each of them has its own characteristics.

Stagnation is a phase of the economic cycle in which there is a slight increase in GDP (from 0 to 3%). This creates unemployment. The standard of living of the population is declining. In the structure of the organization of the economy is not determined by significant changes.

At the same time, scientific developments, new technologies are not being introduced, modern industries are not developing. With stagnation, there is neither a significant drop nor growth.

Types of stagnation

There are several types of stagnation. If it is accompanied by a significant depreciation of the money supply in circulation (inflation), this condition is called stagflation. Quite often, the absence of GDP growth is not characterized by such processes. Therefore, one should distinguish between such concepts as recession, stagnation and stagflation.

There are two main varieties of the phase of insignificant economic growth (stagnation). Stagnation can be transient or monopolistic. The first variety arises as a result of a change in the organization of management (for example, from an administrative to a transitional system).

The stagnation of the second variety appears due to the high concentration of monopoly unions in the sectors of the national economy. The type of stagnation depends on the reasons that caused it. They influence the way out of such a situation.

Causes of stagnation

When studying the question of what stagnation and recession in the economy are, one should understand the reasons for their occurrence. This allows you to understand the main differences. Stagnation can be caused by a number of factors.

These include an incorrect system of political organization and management style, as well as an increase in bureaucracy. At the same time, the nature of production becomes extensive. Lack of innovation leads to significant wear and tear of technology. Norms of regulation at the same time are also not established.

To get out of this situation, significant efforts will be required on the part of the government of the state. Often, third-party assistance from other countries is needed. The plan of measures to increase economic growth must take into account all the features of the organization of economic activity.

What is a recession?

Delving into the topic of what stagnation and recession are, one should consider the main characteristics and stages of a recession. It also has a number of features. A recession is a stage of the economic cycle in which there is a decrease in GDP and other indicators.

This is happening slowly. The decline lasts for several months. At the same time, significant unemployment is observed, and the standard of living of the population is deteriorating. Investment infusions are stopped. Without targeted action by the government, the process will be gradual and lengthy. Production is reduced, fixed assets wear out.

Causes and consequences of the recession

Many internal and external factors lead to the development of such a situation. Asking the question of what stagnation and recession are, a person must understand their development mechanism. If GDP is not only not growing, but is steadily declining, it is possible that the economy is entering a recession phase.

The reason for this may be a sharp increase in production in the previous period. Having exhausted its possibilities, the economic system will inevitably come to the need to reduce production. Sometimes such a situation is caused by external factors, wars, international conflicts.

An increase in prices for raw materials on the world market can also reduce GDP growth. A recession can be caused by uncertain, weak investments or a high level of distrust of buyers and capital owners in the industry and production. If the government does not take any action to improve the situation, there will be an economic depression, a crisis.

Types of recession

Orienting in terms of what stagnation, inflation, recession is, one cannot but pay attention to the variety of the latter. Its types are distinguished depending on the type of graph.

A V-shaped recession is characterized by a sharp drop in production. However, it does not reach the level of depression. The fall is characterized by one point. Then the indicators return to the previous level.

A U-shaped recession differs from the first variety by a long-term unsatisfactory state of the economy. The type of graph in which the GDP level curve forms the letter W has two critical points. After the main fall, there is a slight improvement. Then the numbers drop again. Then the graph reaches the previous level.

A type L recession has a sharp fall and a long recovery period. Many factors affect the type of graph. It strongly depends on a set of measures that the country's leadership is taking to increase the pace of production.

The difference between recession and stagnation

There is a significant difference between the considered states of economic development. Stagnation and recession, whose differences emerge from their definitions, should be understood a little deeper. The recession, although characterized by more negative manifestations, indicates the beginning of the search for a new economic system. It adapts to the current conditions. This process begins with a reduction in production.

Stagnation does not imply any development. The economy is mired in a closed, unpromising production. Therefore, although both processes are considered negative, a recession is still better. It precedes development.

Stagnation does not imply any improvement. Development in this case is not observed. Production simply unreasonably consumes existing resources until they are completely depleted. That is why this state of the economy is dangerous and irrational.

What do recessions and stagnations mean?

For a deep study of the question of what stagnation and recession are, one should also note the general probability of the state of the economy. If the government does not take any action to improve the situation, a phase of depression and crisis sets in. Therefore, both of these processes should not be left to chance.

The government is obliged to closely monitor the main indicators of the country's economy and immediately take a set of actions to increase the level of production. Also, both of these states of the economic cycle indicate mistakes made by the authorities (for example, incorrect budget allocation).

Existing constraints need to be identified and addressed immediately. At the same time, all the details of the organization of economic activity of the state are taken into account. Only a comprehensive solution of pressing problems, competent production planning gives a positive result. Scientific developments, progress should not be held back by any factors whatsoever. This should be supervised by the relevant authorities.

Stagnation is a phenomenon of temporary stabilization, in which there is no growth, but there is no fall in production and business activity in the national economy.

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

Most often, stagnation precedes recession in the economy(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 classical economic cycle consists of four phases - rise (growth), stagnation (stabilization), recession (fall) 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, such as the World Monetary Fund, it is possible to mitigate the effects of stabilization or delay their onset. The longer the economy develops, the longer the stagnation in the economy will likely be, which will lead to a deep decline and crisis.

Stagnation could be observed in the 20s in the USA (before the Great Depression of 1929-1933) and in the late 80s in the USSR.

Types of stagnation

There are two types of stagnation - monopolistic and transitional. Ways out of stagnation and measures to support and stimulate production depend on the type.

The first type of stagnation is monopolistic- appears due to the large concentration of monopolistic unions within the national economy. Such monopolization leads to the almost complete destruction of market competition, which is the cause of stagnation.

Stabilization manifests itself, first of all, in monopolized industries through the underutilization of enterprises' capacities, rising unemployment, and a decrease in investment.

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

The second type of stagnation is transitional- appears as a result of a change in the economic paradigm, for example, from administrative to transitional. 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, a total deficit and discontent of the population.

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 is 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 relate to 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 is described, otherwise the difficult period of economic development may be delayed.

What can an employee expect when laying off during a difficult period for the economy

Reasons for the stagnation of the economy

The main reasons for stagnation include the following:

Stagnation occurs 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 a lack of “tools” for regulating these areas.

The decline 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 greatly affect the quality of products and the volume of demand, which again will lead to stagnation in industry and other sectors.

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 period of stagnation include:

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

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

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

The purchasing power of the population is decreasing, demand is falling, 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 reduced. As a result, inflation (depreciation of money) is growing, which leads to an increase in 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 tends to decrease.

In general, 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 is very relevant today, and you can hear about it quite often on central TV channels. The material explains a lot.

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

Currently, in my opinion, the economy of our period is stagnating. Unjustified seizure by monopolists of certain sectors of the economy, for example, in agriculture. Large enterprises that seized agricultural land and do not use it efficiently. Pastures, meadows, and other natural lands are not used under various pretexts, while the production of beef meat has been reduced to nothing. For the same reason, the business activity of small businesses in agriculture has decreased, since some people own the land, and others have the desire to work.

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 a raw material orientation, so I would not expect an early rise

I do not agree that stagnation is a phenomenon that is neutral in terms of the degree of impact, because if such a phenomenon as stagnation occurs in the economy, this means that the crisis is not far away. Of course, no 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 growth of unemployment and inflation. These consequences are negatively reflected not only in the economic but also in the social sphere.

Well, actually, stagnation is not always accompanied by rising inflation, rather the opposite. To describe the phenomenon of a stagnant economy accompanied by significant (usually double-digit) inflation, there is the term stagflation - a nightmare for any government because of the great difficulty in 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 that the government takes timely and adequate measures that can stop the future consequences of the recession and crisis (since it is impossible to completely avoid them in the conditions of both a market economy and, to a lesser extent, a planned economy), these stages can pass with the least losses for the economy and society and gradually enter the growth phase. This is exactly what was done in the United States during the Great Depression (although a significant economic slide was allowed in the recession phase). So they tried to do in the USSR under Gorbachev, but, due to ignorance of the fundamental economic principles, they failed.
p.s. A note on the philosophical attitude to stagnation and recession (illustrated by a graph) pleased me separately.

An economic crisis never happens unexpectedly. It is anticipated by a recession. Any economic system, even a progressive one, sooner or later enters a recession stage. A recession is undesirable but inevitable.

What does recession mean

Recession- This is a long, at first not very pronounced decline in production and business activity, which over time is aggravated and turns into a crisis.

The recession period is characterized by such phenomena as:

• negative dynamics of GDP (both the quantity of manufactured products and the demand for it decreases);
• low business activity;
• lack of progress in the economy.

Recession is the stage following the stage of rapid economic development. Since all economic systems are cyclical, a recession can be considered a natural process.

It is known that in each economic cycle there are four phases. Rise and flourishing are inevitably followed by a stage of stabilization and stagnation. Recession replaces stagnation. The “life cycle” of the system ends with an economic crisis.

It is useless to try to predict when a recession will start. Nevertheless, the government can prepare the country for it, take a kind of "amortization" measures that will partially neutralize the negative phenomena that accompany the recession. A crisis will come only if the economic policy of the state turns out to be ineffective.

Causes of a recession in the economy

The economic downturn does not happen all of a sudden. It is the result of many events and processes.

1. 1. A recession can be caused by global and unexpected changes in the market, which, in turn, are provoked by political changes. Roughly speaking, armed conflicts or fluctuations in gas / oil prices on the world market may be to blame for slowing down production rates and reducing demand for any product.

   Unfortunately, the Russian economy is obviously dependent on the cost of oil. As soon as the market price of oil falls, the budget begins to experience underfunding, which ultimately affects the volume of the gross domestic product. Experts believe that a recession that develops according to such a scenario poses the greatest danger to the state, since it cannot be predicted and neutralized in time.

2. 2. The second possible reason for the recession is a total decrease in production volumes. A serious decline in production was recorded in 2008. It amounted to more than 10%.
3. 3. The lack of “extra” money for citizens and the decrease in their purchasing power also lead to a recession. True, it is believed that the recession caused by these reasons is quite surmountable and does not have such sad consequences as a recession provoked by wars or market shocks.
4. 4. Another factor in the occurrence of a recession is the outflow of capital and the lack of investment. Replenishment of the fixed capital of the state occurs at the expense of private enterprises. If the government is interested in these injections, it must provide business with such conditions under which it could develop normally within the framework of the national economic system.

Consequences of the recession in the economy

Now let's list the consequences of the recession:

• there is a collapse of financial markets;
• the pace of production slows down;
• banks limit the issuance of loans;
• interest rates on loans are rising;
• the number of unemployed is also growing;
• incomes of the population are declining;
• GDP is decreasing.

All these phenomena together lead to an economic crisis.

The result of the decline in production is a decrease in the need for workers. Industrialists fire people, and they can no longer find a new job. A decrease in income leads to a restriction of needs. As a result, the demand for goods that can be dispensed with decreases. Production does not experience any incentives for development.

Individuals and legal entities become debtors of banks. Circumstances force banks to limit the issuance of loans. Investment in research projects and industrial enterprises is reduced, the country begins to lag behind in terms of science and technology. Stagnation in the manufacturing sector affects the value of shares issued by industrial enterprises. They lose value.

The next stage of the crisis is characterized by an increase in inflation, the beginning of the devaluation of the national currency. Prices continue to rise and incomes continue to fall. The standard of living of the population is also falling, which leads to mass discontent.

The government seeks financial assistance from more prosperous countries. The external debts of the state are growing. To repay one loan, you have to take several others.

All these negative phenomena directly affect the volume of GDP. Its decline indicates the deterioration of the economic situation in the country.

It is noteworthy that among economists there is no consensus on the nature of the recession. Some believe that this phenomenon in itself is not critical, while others believe that recession, collapse and depression are synonymous.