a global economic collapse is a crisis which involves the breakdown of all nations economies (also regional and territorial) a notable example of an economic collapse is the 1930’s great depression where the effects cause the American homeless population to rise from 1% to 25%, housing prices plummeted by 67% and other negative effects that hurt the average persons quality of life also took the US a quarter of a century to fix.
Now, the signs of an economic collapse are debts crisis, currency crisis, increase in interest rates (which may lead to high inflation rates) and a few others. It is rare that a country is not in some sort of debt that they have to pay off as they and furthermore there are sovereign debts to help prevent fiscal debts, however things can escalate to dangerous heights, one example would be the U.S where they are currently as of 2021 in a debt of 28.9 trillion dollars exactly and this is due to the government ignoring the fiscal debt since rising healthcare costs(which the average American usually can’t pay off), aging baby boomer generation and the fact that current tax policies or government spending are all largely contributing to the current debts.
Speculations about the coming depression is being expressed by many economists and articles but here are three compelling analyses as to why this is the case, one which was mentioned above is part of those three.
China Evergrande collapse
Evergrande a Chinese real estate company is in a debt of 300 billion dollars and in a very big of paying it off the company has asked for help and sold some unfinished property, 30% of china’s GDP Is from real estate as well as investors and home buyers panics could affect property prices and others which will affect household wealth and confidence which has an effect on china’s ability to use finances in global and international business affairs. Now, the reason why this is a big factor for why an economic depression may happen is because china is the second biggest economy in the world and a country of that magnitude would almost certainly affect most countries around the world.
Due to the 2020’s global pandemic, countries all over have gone through month-length periods of recessions due to many lockdowns throughout many countries, articles and economists have said that 2020’s epidemic recessions last longer and may be hard hitting than 2008’s. Shutdown of economies stop imports and exports and business in international work. This naturally has an effect on many economies, alongside the fact there are those who refuse to work after the restrictions have been released in the country which is another bad addition to the economy.
There are many more factors and crisis in different countries that is contributing to the coming collapse but these were the three big reasons why many people say a coming big recession or collapse is happening in the near future.
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