zalo

What Are the Chances Ukraine Just Hit the Second Great Depression?

Even though i agree that this recession will be quite strong, i disagree that this will turn out to be a depression. The countries that are collapsing are doing so because of bad debt management at the government and corporate levels combined with a decrease in foreign currency income (from commodities or exports). Huge foreing external dependancy is now taking its toll on them, Iceland and Ukraine are examples of that. But other countries with more balanced economies, thou slowing down, have quite stable economies, like Brazil, China or India and even Mexico.

Lets remember that in the 30s depression unemployment rose above 20% and we had a deflation of nearly 10%, we are rather now at the 7-8% levels unemployment and the worst case scenario i have seen for inflation is -4% for 4Q mainly due to energy costs drop, which actually will be positive for demand in other items.

So, this will be a strong recession, not a depression, but yes, some countries will go under because of their poor debt management.