Global economic stagnation

Experimental visualization of narrower problems
Other Names:
Declining world economic growth
Sluggish world economic growth
Declining growth in world economy
Weak global economic growth
Slow-down in international growth of economic output
Global financial paralysis
Negative economic growth

Economic stagnation exists when the total output (or output per capita) in goods and services is constant, falls slightly, or rises only sluggishly. It also exists when unemployment is chronic and increasing. Such conditions may exist in particular industries, in wider sectors of an economy, or in the economy as a whole. It may persist because the economy is dominated by unchanging traditional patterns in which there is no incentive for change. Alternatively, the economy may be held in a state of static equilibrium at low levels of income.


In the 1950s and 1960s, the global economy grew by about 5% a year, sending living standards soaring in many parts of the world. In the 1970s, growth fell to slightly above 3%, and in the 1980s it has slipped to about 2.3%. Coupled with rising population, this means that the world economy, while growing, is very fragile indeed. A key factor in stagnant economies is the lack of incentives to invest accumulated capital. Since venture capital has become internationally mobile it may have nowhere to go in the cases of regional, hemispheric, or industrialized-nation stagnation. In times of stagnation, therefore, governments may feel that only their intervention in supplying money can stimulate growth. This can be successful in the short run but can exacerbate national debts and ultimately lead to higher taxes and interest rates. Elected officials who feel their tenure depends on their solving stagnation may turn to military spending or trade protectionism or both. Thus times of little or no economic growth may be periods of high international tension.

[Developing countries] Growth has slowed substantially in developing countries. By early 1985, the economic and financial positions of most major debtor developing countries had failed to improve to the extent originally expected, despite a relatively strong cyclical upturn in the USA economy in 1984. In many of these countries the view began to prevail that the strategy in force required them to sacrifice growth indefinitely. Some African and highly indebted countries have suffered significant declines in incomes per capita. Their investments have fallen to levels at which even minimal replacement may no longer occur in important sectors of their economies. Their debts are growing, but they still face negative net resource transfers because debt service obligations exceed the limited amounts of new financing available. In some developing countries the severity of this prolonged economic slump already surpasses that of the Great Depression in the industrial countries, and in many countries poverty is on the rise.

Real output of the non-oil developing countries grew at only about a 2% annual average in the early 1980's, and almost all of any output gains realized were absorbed in reducing current account deficits due to trade losses and high interest payments. Per capita incomes have fallen in these countries, at great social cost.
[Former socialist countries] The growth of net material product fell from over 6% in the early 1970s to 2% in the beginning of 1980s. The earlier high rates were made possible by heavy investment in basic industries, notably engineering, metallurgy, electric power generation and chemicals, as well as by the abundance of labour and raw materials. How ever, as labour reserves became exhausted, investment became increasingly capital-intensive. Moreover, investment requirements in fuel and raw material exploitation rose as new deposits had to be worked. Although the external sector of the former socialist countries of eastern Europe is small, there is no doubt that the slower growth of their trade owing to recession in the developed market-economy countries and the growth of protectionism has affected the overall economic performance. In addition, increased indebtedness as a result of export credits accorded by the developed market-economy countries, together with high interest rates, has exerted pressure on the external accounts of some former socialist countries, which have faced larger annual interest payments and heavy refinancing requirements, as loans come to maturity.

World Economic Forum (WEF)
Organisation for Economic Co-operation and Development (OECD)
International Monetary Fund (IMF)
Asian Solidarity Economy Coalition (ASEC)
European Forecasting Research Association for the Macro-Economy (EUROFRAME)
European Association for Evolutionary Political Economy (EAEPE)
High Council of Islamic Economy in Europe (HCIEE)
Economy and Environment Programme for Southeast Asia (EEPSEA)
International Institute of Inspiration Economy (IIIE)
World Association for Political Economy (WAPE)
European Institute for Solidarity based Economy
Political Economy of International Organizations (PEIO)
RIPESS Europe - Economy Solidarity Europe (RIPESS Europe)
Social Economy Europe (SEE)
Alliance for a Responsible Plural and Solidarity Economy (ALOE)
CARICOM Single Market and Economy (CSME)
European Centre for International Political Economy (ECIPE)
European Research and Development Service for the Social Economy (DIESIS)
Global Social Economy Forum (GSEF)
Green Economy Coalition (GEC)
Intercontinental Network for the Promotion of the Social Solidarity Economy (INPSSE)
International Initiative for Promoting Political Economy (IIPPE)
Latin American Women's Network to Transform the Economy
Southern African Political Economy Series Trust (SAPES Trust)
Women's Forum for the Economy and Society
3D - Trade - Human Rights - Equitable Economy
Center for Global Political Economy, Burnaby (CGPE)
Centre for Global Political Economy, Brighton (CGPE)
Global Society for Ecology and Sound Economy (ECO2TERRA International)
Kiel Institute for the World Economy
Mediterranean Network for the Knowledge Economy and Innovation (MEDAlics)
World Economy Research Institute, Warsaw (WERI)
World Economy, Ecology and Development (WEED)
Asian Development Bank (ADB)
Related UN Sustainable Development Goals:
GOAL 1: No PovertyGOAL 2: Zero HungerGOAL 3: Good Health and Well-beingGOAL 4: Quality EducationGOAL 5: Gender EqualityGOAL 6: Clean Water and SanitationGOAL 7: Affordable and Clean EnergyGOAL 8: Decent Work and Economic GrowthGOAL 9: Industry, Innovation and InfrastructureGOAL 10: Reduced InequalityGOAL 11: Sustainable Cities and CommunitiesGOAL 12: Responsible Consumption and ProductionGOAL 13: Climate ActionGOAL 14: Life Below WaterGOAL 15: Life on LandGOAL 16: Peace and Justice Strong InstitutionsGOAL 17: Partnerships to achieve the Goal
Problem Type:
C: Cross-sectoral problems
Date of last update
17.10.2021 – 05:40 CEST