The economic crisis refers to a period or stage of scarcity in such important elements within the economy factor as are the production, marketing and consumption of manufactured products.
The economy is a cyclical process, that is, it combines fluctuating stages of ups and downs, expansion and contractions. Under this principle it can be said that all low ends high and in the opposite way.
The business cycle has four phases, namely:
- Ascent : it is the stage of increasing economic activity until reaching the peak point.
- Downhill : where the indicators go down
- Recession : when the previous point manages to extend for a period equal to or greater than two quarters.
- Reactivation : when the process ends its low phase and begins to rise.
At the time of an economic crisis, the damages that can be generated are extensive, affecting social, patrimonial and political areas and finally, the set of economic agents that are included in this stage of contraction of the cycle.
- One of the main characteristics that we can establish is the various inconveniences that may arise within the operating mechanism of the economic system.
- Negative impact on the life of society as well as in various social and political areas.
- Instability in the market.
- Difficulty making good decisions.
- Transmission of instability to the rest of the areas and factors that influence the economic sphere.
- Poor implementation of economic policies by the ruling governments.
- Disasters of a natural, social or political nature, such as earthquakes, wars, coups, among others.
- Fluctuation or inconsistency in the cost of raw material. This can generate periods of bonanza as well as periods of scarcity due to the inconsistency of the price.
Types of economic crises
According to the nature of the crisis, we can talk about some variants, among which we can mention:
This type of crisis is generally presented by uncontrollable external factors that occur naturally in this environment. An example of this we can mention the climatic phenomena that can cause production to decrease and thus avoid the complete satisfaction of demand.
They are generated as a result of difficulties or problems that arise in the distribution chain. These types of actions generate a chain reaction and make it impossible to function properly.
It refers to the case that is generated as a result of insufficient products compared to customer demand , that is, the product exists but it is not enough for the market request. As a consequence, this generates a high and considerable increase in prices, affecting in the same way the purchasing power of consumers.
It occurs when there is an excess supply or, on the contrary, a fall in demand, thus unbalancing the economic cycle and in turn causing a significant drop in production costs.
Examples of economic crises
- The crisis of 29 better known as the great depression
- Wall Street Stock Market Bonds Fall
- The oil crisis of the 70s
- The Spanish crisis of ’93
- The Venezuelan economic crisis is a product of the implementation of policies not in accordance with those of the rest of the world.
- Bolivian economic crisis as a result of the overthrow of former president Evo Morales
- The economic crisis that Ecuador currently presents, a product of the Coronavirus pandemic. This crisis has strongly affected this nation because they recently paid a part of their foreign debt and do not have sufficient resources to face the current situation.
- The crisis in Cuba as a result of the economic blockade imposed by the United States.
- The Haitian crisis. Product of a natural phenomenon, this country was devastated which caused a great economic crisis.
- The Palestinian economic crisis. As a result of the current war, this small nation has been hit hard in all respects.