Though the causes of economic crises vary, their outcomes are often similar. Poor financial decisions, diplomatic disagreements, or unexpected events can directly affect the economy and lead to major collapses. The economy can be shaken by even the smallest changes, and sometimes these shocks threaten the entire system. For more information on the history and causes of major economic crises that have had global impacts, continue reading our article. Here are some notable global economic crises and their causes!
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The Great Depression (1929)
Start: 1929
Duration: 10 years
Causes: Collapse of the U.S. stock market in 1929, weakness in the banking system, collapse in the agricultural sector, and deflation.
Consequences: Record high unemployment rates globally, contraction of global trade, bankruptcy of many banks and companies. Widespread poverty and social unrest occurred particularly in the U.S. and Europe.
The 1973 Oil Crisis
Start: 1973
Causes: OPEC countries drastically cut oil production, causing a sharp increase in oil prices. This greatly raised energy costs, especially in Western countries.
Consequences: Global economic stagnation, rising inflation (stagflation), changes in energy dependency policies. This crisis also paved the way for research into alternative energy sources.
The 1997 Asian Financial Crisis
Start: 1997
Causes: Collapse of Thailand’s baht currency and its rapid spread to other Asian countries. Factors included excessive borrowing, speculative investments, and weak banking systems.
Consequences: Severe contractions in Asian economies, increased unemployment, social unrest, and intervention by the International Monetary Fund (IMF) in the region. The crisis led to prolonged economic stagnation in many Asian countries.
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The 2008 Global Financial Crisis
Start: 2008
Causes: Burst of the housing bubble in the U.S., widespread defaults on subprime mortgages, derivatives, and weaknesses in the banking system.
Consequences: Significant disruption of the global financial system, bankruptcy of many major financial institutions, large-scale government bailout packages. Long-term economic stagnation resulted, with millions of people losing jobs, particularly in the U.S. and Europe.
The Eurozone Debt Crisis
Start: 2009
Causes: High debt levels and budget deficits in countries like Greece, Ireland, Portugal, Spain, and Italy. The crisis even raised the possibility of these countries leaving the Eurozone.
Consequences: Depreciation of the euro, economic stagnation in the Eurozone, and increased unemployment rates. The European Central Bank and other European institutions provided substantial bailout packages to restore economic stability.
The COVID-19 Pandemic Crisis
Start: 2020
Causes: Global pandemic leading to lockdowns in many countries, halts in production and trade, and rising unemployment rates.
Consequences: Global economic contraction, particularly severe losses in the tourism and service sectors. Governments introduced large stimulus packages, but recovery of the global economy took a long time.
