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Recession of 1709 AN

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From 1709 AN-1711 AN, the Federation of Nouvelle Alexandrie, Kingdom of Ransenar, Western Natopia, Eastern Natopia, and other Micran nations suffered a spike increase in inflation as disruptions in the supply chain mounted in the lead-up to the Natopian division. Further economic uncertainty and lengthy negotiations throughout the mid-1700s surrounding the division of the Natopian Empire, growing consumer demand outpacing supply and manufacturing capacity in all nations, and disruptions in Ransenar and in Lyrica due to the Great Vanic Revolt all contributed to trade and industrial activity contracting. This caused a fall in GDP in several successive quarters in Nouvelle Alexandrie, Ransenar, Western Natopia, Eastern Natopia, and Constancia. Shortages of key consumer goods and food further drove prices of daily staples upward, placing additional pressures on individuals and governments in the affected economies. The economies impacted by this recession are characterized as deeply interconnected economies through financial, military, political, and cultural common associations such as the Raspur Pact, the Community of Goldfield, and the Euran Economic Union.

The recession of 1709 AN-1711 AN was a relatively mild recession but was longer than anticipated. The recession lasted for 13 months, beginning in late 1709 AN and ending in early 1711 AN. The recession ended one of the longest periods of economic expansion in the history of Nouvelle Alexandrie, which had begun in late 1694 AN. In many countries like Nouvelle Alexandrie, Ransenar, and Eastern Natopia, the contraction in economic activity also coincided with the active work of their governments in closing large budget deficits and many of their central banks raising interest rates to stop runaway inflation.

During this relatively mild recession, the Gross Domestic Products of Nouvelle Alexandrie fell 1.2%, Ransenar's fell by 1.7%, Constancia's fell by 0.3%, Western Natopia's fell by 0.9%, and Eastern Natopia's fell by 0.4%. Though the recession ended in early 1711 AN, the unemployment rate in many of the affected nations did not peak until much later. The most affected economic sectors in this recession were tourism, retail, transport, housing, manufacturing, and banking.

As additional large infrastructure projects in Nouvelle Alexandrie came online and more clarity was obtained on the settlement of the Natopian division, economic growth resumed in all the affected economies by the start of 1712 AN, with improved unemployment numbers and decisive action in the economies of the affected nations by their governments to address the recession.

Background and causes

Great Vanic Revolt

Main article: Great Vanic Revolt

Division of the Natopian Empire

Impact on countries

Nouvelle Alexandrie

  • steep decline in tourism in its "normal" hot spots, in particular in the Southern Aldurian Riviera;
  • 1710 AN - bankruptcy rate in the entire country goes up; the impact of pain in the tourism sector spreads to the banking, retail, and services sectors as consumers start to feel the rising prices of food, mortgages, and other services and consumer goods;
  • 1710 AN - unemployment spikes to 12% [3];
  • 1710 AN - the accession of Anhuaco to the Raspur Pact adds additional Keltian trade partner;
  • 1709 AN - 1711 AN - Federal Bank of Nouvelle Alexandrie increases interest rates, cooling the overheated real estate markets in many New Alexandrian cities
    • Rental costs continue to mount, however, as there is not enough supply of housing to meet demand currently or in the future.
  • 1710 AN - 1711 AN - key victories by the Federal Forces wrap up the Great Vanic Revolt;
  • 1711 AN - constitutional reforms, action on housing, the dust settles around Natopian division, Western Natopia and Eastern Natopia divide with no animosity and in cooperation with each other under the Declaration of Lindstrom and their respective laws and regulations.
    • Economic Rights and Expropriation protections were expanded and constitutionally enshrined, which greatly pleased businesses and entrepreneurs.

Ransenar

  • Ransenari farmer-labor crisis, 1709 - Critical shortages of labor in Ransenar's agricultural and mining sectors lead to delays in order fulfillment for agricultural and other raw material exports to Nouvelle Alexandrie, Western Natopia, Eastern Natopia, and Constancia, the average age of Ransenari farmer is about 50 years old, many farms have fallen into large regional farming conglomerates that each entered into government-mandated labor agreements with their workers or farmers;
    • Disruption in Ransenar led to food prices starting to go up in the economies that regularly consume Ransenari food: Nouvelle Alexandrie, Western Natopia, Eastern Natopia, and Constancia;
    • The shipping industry in Ransenar was also woefully understaffed, making it more and more dependent on machinery and automated processes that could get easily bogged down;
  • Over previous decades, Ransenar has been focusing efforts on modernization through scientific research and development at the University of Goldfield with subsidies and grants. Economic benefits of scientific research have taken quite a bit to materialize, but the University of Goldfield managed to reach lucrative licensing contracts for their desalinization technology in the Alcalá Declaration. These economic investments suffered greatly in the Recession as promises of development around Lake Nerub didn't fully materialize or had to be placed on pause while the economy recovered;
  • 1710 AN - Ransenari government bails out several farming cooperatives, food processing companies, farming companies, regional farming banks, and savings cooperatives in the Rescue Our Farmers Act;
  • 1710 AN - Ransenari economic reforms: separation of commercial and investment banking (preventing securities firms and investment banks from taking deposits); created new agencies and offices such as the Commission for Banking and Securities' Regulation and the Ombudsperson of the Consumer, among others;
  • 1710 AN - Regional and local bankruptcies spike as order cancellations, shipping delays, layoffs, and other effects from large bankruptcies begin to ripple out into the economy. Unemployment spikes to 8%;
  • 1711 AN - Economic reforms, repairs to ports, and repairs/expansions to other critical infrastructure to increase trade and commerce begin to lift consumer confidence, and further mechanical and process reforms (aided by engineering teams from the University of Goldfield, SATCo, and Kerularios & Co) help correct disruptions in supply chain automated processes. Job programs are enacted to recruit unemployed with driver's licenses with jobs in shipping.
  • 1711 AN - IDP government introduces taxation reforms that impose a minimum corporate tax on all Ransenari companies and close corporate tax and regulatory loopholes.

Western Natopia

Eastern Natopia

Constancia

See also

Ref