BlessWorld Foundation International

A depressed economy is one which suffers a severe, continued, long-standing, recession in economic activities resulting from unforeseen rapid rise in the value of a unit of account. An economic depression is an uncommon and extreme form of recession categorized by duration, unusual rise in rates of unemployment, employees’ resistance to nominal wage cuts, long-lasting credit contracts such as mortgages, decrease in credit availability due to financial crisis and bank failures, price deflation, decreased output as consumers reduce and productions and investments decline, increased rate of bankruptcies including sovereign debt defaults, reductions in international trade and commerce, anxiety and volatile fluctuations in currency value. These reflect the fact that money, which is the root of the economy, essentially has a market like food or cars which has a specific value at any point in time depending on the existing economic conditions. From a purely economic standpoint, economic depression is defined by two factors; decline in real GDP exceeding 10%, or recession lasting 2 or more years.

Similar to medical depression, economic depression has broad and widespread social, economic and psychological effects. It leads to a dramatic reduction in employment, human potential and productivity as well as cripples a country’s output, efficiency and success. As a matter of fact, loss of employment, being one of the major concerns during an economic crisis, has a causal association with mental health problems such as depression. Depression then reduces the chances of re-employment and reintegration into an already stressed economy and ultimately leads to increased debts for the unemployed. Existing data from research show that financial hardship, typically resulting from a depressed economy, can also lead to increased mental health problems and anxiety, rent and mortgage debt, consumer debt and significant deterioration in quality of life and well-being. Following re-employment after economic depression, the labor force may experience reduction in independence, self-direction, locus of control and competence due to loss of skills during depression.

Although some individuals remain employed during an economic depression, they are not exempt from the consequences of the crisis. Constant anxiety due to job insecurity complicates existing depression and affects the productivity of the working force. There is also stress resulting from increased workload since independence and specified job duties are threatened by the contraction of the workforce. Consequently, the ambitions of individuals to pursue opportunities for employment are limited by less choices and more rigorous job requirements in the labor market. All these effects of a depressed economy ultimately affect nations and global health in general.

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