The most recent data we have suggests that GDP across the world dipped almost 6% in 2020. It feels like we keep hearing news about unemployment and escalating prices, but it is important to know the truth and how to wield it. But are we able to test that for ourselves, and where would we start?
This article aims to answer the question of “What makes an economy healthy?” By the time you finish, you should have a good handle on what the world’s governments are doing to create economic stability. So, read on and learn more.
What Makes an Economy Healthy
To answer “What makes a healthy economy?”, we have to start by breaking down the aims of the global economy.
In short, every economic region, be it a city or country, has three major aims. These are:
- Continual economic growth
- A high level of employment among its citizens
- Stability of prices
Growth in an economy has many measurements, but one of the primary methods is to see how well it can provide its citizens with goods or services. These could be necessary services, such as houses, utilities, or basic healthcare, or they could be luxuries, such as fast food or computers.
A growing economy increases its ability to provide these things over time. Thus, it increases the country’s gross domestic product (GDP).
Scholars such as Thomas Piketty point to inequality as a byproduct of unequal growth between regions. He seeks to define fiscal policies that would prevent such an increase in inequality.
To allow for growth and an increase in GDP, people need money. To get money in a capitalist economy, the citizens often need employment. By having a low unemployment rate, a region can ensure that its people can take part in the economy.
Stability in a market is when prices do not increase or decrease by any great amount. Rising prices can harm the ability of an individual or a business to buy things. In that situation, you will have inflation.
What Is the Current Global Economic State
The current global economy forecast suggests a slowdown in growth. Because of COVID-19 and other current world events, we are seeing a drop from 5.9% in 2021 to 4.4% in 2022. As we move forward, we can expect it to slow further.
As a comparison, the current US economy has gone through a recent dip. While the pandemic has affected the dollar, it looks to be bouncing back stronger than before though. The big concern at present is the price of oil, with the Russia-Ukraine conflict having an ongoing effect on its availability.
Where To Learn More
Now that you have educated yourself, you can move forward with the knowledge of where the economy will move in the future. By knowing what makes an economy healthy you can make better choices and improve yourself and your business. If you still have further questions, though, we would recommend that you check out our site.
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