28 - Fifteen World Economic Phenomena That Stood Out During the Decade of the 1980s (1989)

Summary

Introductory Note: Throughout the 1980s, the world experienced dozens of dazzling economic phenomena. A difficult recession occurred in the early years of the decade. Afterwards, industrial countries enjoyed a rapid growth simultaneously for seven years. Then the worst stock market crash since 1929 struck. In 1985, the U.S. dollar depreciated sharply against the yen, mark and other currencies. This development, coupled with a sharp decline in oil prices, hit Indonesia's economy like a one-two punch. During the 1980s, the world had to cope with an environment of high real interest rates. Another important symptom was a U.S. balance of payments suffering from a budget and current account deficit. This led to a huge surplus in Japan and West Germany. Also in the 1980s, capital moved from developing countries to developed ones. This was the result of the huge amount of debts owed by the developing nations. The debt crisis troubled many economies in Latin America. In the Southern Sahara Desert in Africa, the level of people's welfare dropped considerably. In contrast, the economies of South Korea, Taiwan, Hong Kong and Singapore grew swiftly. Another prominent economic phenomenon in that decade was the emergence of protectionism on the basis of a variety of excuses.

Now it is 1989, just months away from entering the 1990s. To help foresee economic developments in the next decade, it would be good to turn back the clock and observe what has happened to the world's economy in the 1980s. There were quite a few occurrences, but we will focus on the fifteen most prominent ones.

First, we still remember the exceptional recession in the early 1980s. That hard-hitting recession took place from 1980 to 1982. The recession was so grim that some called it a depression, just like the one occurring in the 1930s.

Second, after the recession, a recovery process began in the industrial countries. These countries recovered and enjoyed economic growth. Their economies have not only recovered, but have expanded substantially and continuously from 1983 until now, 1989. This has resulted in an economic growth spurt of seven straight years, which is a rarity in the history of the world's economy.

As we are all aware, the world's economy develops in cycles. There are downs and then ups, which are called recoveries. So the economy improves and grows.