Recession of 1726

The Recession of 1726 is a significant economic downturn primarily affecting Nouvelle Alexandrie, Constancia, and Oportia. Beginning in early 1726 AN, the recession is characterized by a sharp decline in gross domestic product (GDP), increased unemployment, decreased consumer spending, and inflation, particularly in food prices. The recession has been linked to a combination of environmental, financial, and global trade factors, significantly impacting the economies of the affected nations.

Background

The roots of the Recession of 1726 can be traced back to several key events and conditions. The 1721 Oportian protests and the ongoing economic situation in Oportia first led to regional economic difficulties. Thanks to an intervention by Nouvelle Alexandrie and the Euran Economic Union, the Oportian economy was rescued and economic reform delivered by its elected officials between 1721 AN and 1726 AN.

In Nouvelle Alexandrie, cyclical and worsening droughts started to set in on two key Regions of Alduria and New Luthoria. While the federal and regional governments have worked to enact water rationing and implement water saving policies, reservoirs are low and farms are demanding more water for their crops. The droughts have led to massive crop failures and the upending of farming in Alduria and New Luthoria as tens of thousands of family farms, as well as larger operations, are either declaring bankruptcy or struggling to survive in the current conditions. This situation was further exacerbated by the failure of two major Constancian banks, Banco Nacional Aguilar and Euran Trust & Commerce Bank, which were heavily involved in agricultural financing in both countries. These banks' collapse triggered a financial crisis in Constancia and had a ripple effect in Nouvelle Alexandrie, affecting various sectors of their economies.

Impact

Nouvelle Alexandrie

Nouvelle Alexandrie faced a sharp increase in unemployment, rising to 6.5%, and a significant decrease in GDP by 6.1%. The agricultural sector's collapse led to increased food prices, contributing to a cost-of-living crisis. Consumer debt rose sharply to NAX€ 1.3 trillion, indicating growing economic stress among households. However, the tourism industry and renewable energy sector remained resilient, showing growth despite the downturn.

Constancia

Constancia saw an uptick in migration to Nouvelle Alexandrie and signups for the ESB Voluntary Labour Organisation (Keltia).