Recession of 1737 (Imperial Federation)

The Recession of 1737 had worldwide effects, many of which were felt directly by the Imperial Federation. Being a nation with far-flung holdings across its vast domain, the Imperial Federation experiences most of its economic gains and troubles regionally at first, with effects radiating from one region to the next until the central government from both Gondolin and Glacier City responds directly. Thus, both regional and macro forces both internal and external have gradual effects on the rest of the Imperial Federation, making it a more sensitive nation to foreign events on its outer regions, with the large islands constituting its core homelands insulating the bulk of the empire's internal security structure from such knock-on effects. Thus, passive effects tend to reach the core more slowly.

Overall, the weight of growth in the inner and outer cores of the Imperial Federation posted massive growth in a number of industrial sectors, with effects on the plus side eventually winning the battle. Its periphery, while having lost territory, eventually came out on top, but only after a painful, region-wide recession that dragged the empire down to a degree that prevented it from realizing its more ambitious foreign policy objectives. Overall, the Imperial Federation saw a softer landing in its peripheral regions by the end of 1738 AN due to unusual external events in Keltia blunting demographic shocks from territory loss, and on Eternia only thanks to massive spending that left the treasury much less full than Emperor Anarion otherwise wanted at the end of that year.

Overview

Upsides

Positively, 1737 AN and 1738 AN saw the advent of peacetime across nearly the entirety of the empire, a further explosion in net population, stabilized territory, infrastructure and industry development on an unprecedented scale, and national security seeing either a favorable situation, or significant improvement towards one in nearly every one of its major borders -- with The Green or otherwise. The advent of peacetime empire-wide similarly freed up vast economic resources that were put to use developing the extraction, refinement, and shipment of raw materials from regions such as Valora, Nixtorm, northern Adrestia, and western Drag'os to nearby megacities in the empire, and efforts in the most remote regions such as Eternia and the Northwest Territory experiencing slower growth due to their remote locations.

Similarly, the core experienced rapid growth as it increased the rate of production of refined and advanced materials, creating a vast surplus for shipment back to the frontiers, where these products fed into the accelerating growth and forming a so-called "Outer Core" -- that is, Valora, Nixtorm, and adjacent regions. With economic acceleration taking place amidst a construction boom across the majority of the empire's landmass, the treasury saw rapid gains before 1737 AN, despite an increase in the nation's military expenditure due to developing military situations on its doorstep and with other Raspur Pact allies overseas. Thus it was that these regions were largely insulated from the economic shocks that plagued much of Micras during these two years, and posted remarkable growth instead.

Downsides

Negatively, factors influencing the so-called "periphery" of the Empire triggered mass recessions that triggered a sharp, deep recession that partially led to the loss of territory in Haifa after referenda in each major district there. A recession among the major powers in Eura led to a similarly poor economic outlook being generated in faraway Eternia and nearby holdings for months to come. With the deteriorating situations in Haifa with its struggles against the Dispossessed coming to a climax, the Imperial Federation was unable to do much to help elsewhere. And thus they could only watch as the situation in the rest of Keltia deteriorated for its Raspur Pact allies there, with Anahuaco and Normark completely collapsing and triggering huge refugee crises, Moorland getting a sound beating from its side of the Straits, and the Dispossessed otherwise taking over the north end of the Straits. The collapse of the Haifan trade network, while less badly felt in the Imperial Federation's core, did affect the immediate region badly, and dependence on the rest of the Imperial Federation was the only saving grace the region saw, hence the reason certain trade-dependent regions chose to remain Ralgonese territories.

On Drag'os, the Third Great Swamp War on Drag'os was slowly kicking off, but at such a pace that the economy was able to adapt as usual to the forever war at the Swamps and instead focus on building aggressively around the Badlands to its west in preparation for anything that might happen. On its erstwhile allies' part in Benacia, Shireroth and the Benacian Union were at war. Thus, the Imperial Federation as usual found much of its surplus treasury spent on either expanding its military once again to compensate for lack of clear alliances in its own back yard, while also injecting considerable amounts of money into economic stimulus for mainland Keltian and its remote Euran holdings. Overall, these events dragged down growth enough to interfere with its biggest foreign policy objectives, while still resulting in net economic gains in the longer term.

Keltia

Background

The Imperial Federation saw a short but very deep recession in Eternia, Geneva, and Haifa. The Ralgonese government noticed a near-collapse in trade across the Straits of Haifa as a result of the mass collapse in the region, and so its only nearby trade partner in the region were the Bassarid allies that helped it salvage the situation there. Thus, the only saving grace was the joint Ralgonese-Bassarid forces' military victory across the southern half of the Straits, averting a collapse in the region for both nations in the same manner Normark and Anahuaco faced. This same military victory, coupled with the influx of huge financial resources, saved these two areas from voting in favor of Bassarid rule and thus a total Ralgonese loss of territory north of Blore Heath.

Haifan Demographic Shocks

While the initial massive loss of territory in the Haifa region might have sealed the fate of its demographic integrity soon enough, this was not to be, ironically thanks to the collapse of so many large neighbors. Three factors contributed to the region's salvation from near-certain loss from Ralgonese hands. Firstly, the influx and concentration of economic and military resources into these smaller areas was especially outsized due to the climax of the Wars of the Dispossessed in the southern Haifan regions. Thus, the investments in civilian and military industry and infrastructure on both Bassarid and Ralgonese areas in the Wars' aftermath lessened or even reversed the local crisis after several months. Thanks to hard work by local leaders, Ralgonese and Bassarid multinational enterprises redoubling investment in people and infrastructure, the region economically and demographically recovered, although this would carry its own costs down the line.

The proximity of these territories to so many (formerly) Raspur Pact countries provided a nearby safe space for the massive numbers of refugees to settle in. Additionally, large numbers of people moved into these territories after the war's end to take advantage of Ralgonese concentrations of wealth after the victory, before the handover of territory was complete. These twin waves of mass migration nearly negated this population loss in the matter of months, providing much needed labor in well-developed areas that would otherwise have collapsed irreversibly. While housing vacancies otherwise averted the worst of a housing crisis, there were still ongoing issues, contributing to strain on the region's infrastructure for several years.

Even though resources were initially strained, that same sudden influx of much needed labor was much needed to power industrial sentiment and aid in a relatively painless economic recovery, at least from a bird's eye view. In truth, the mass refugee migration from the north similarly caused the populations of both the Haifa and Geneva regions to recover nearly to their pre-collapse levels nearly overnight. This, however, came at the cost of further demographic shocks that left harsh issues in these regions for at least the next decade to follow, sharply rising inequality being only one challenge to contend with. Still, the treasury surplus built over the past five years was immensely reduced or even outright eliminated by the end 1738 AN due to Anarion taking an aggressive stance to prevent further pain (and resulting separatism) from radiating to other portions of the empire, while still increasing infrastructure investment empire-wide. It would take years to see significant gains materialize, placing the central government in a less advantageous position.

The Northwest Territory

The Northwest Territory wasn't so lucky to be considered fit for hosting massive military bases, homegrown heavy industry, or concentrations of funds in a small area, and while the trading economy there was far less developed to the western ends (including in and near the joint Melanje reservation), Blore Heath still took the brunt of the recession, and only through aggressive stimulus from the vast resources far to the east did the territory pull through quickly. The rest of the region felt this directly, and experienced a slow-burn recession for the next 18 months before recovering to pre-recession levels of external trade.

Eternia/Eura

The recession in the Keltian territories hit hard and hast, but was over with quickly. Eternia wasn't so fortunate to get it over with quickly. Thanks to the recessions smashing other major Euran economies, Eternia's own tourism-dependent trade economy bottomed out for several months, resulting in a GDP drop of well over 5% in the following year. This recovery would come slowly, with the country relying more heavily on Ralgonese military shipments and remittances from the rapidly increasing population of Eternian workers in other Imperial Federation territories. Estimates from the central government predicted that it would take almost seven years for the economy to recover without significant stimulus, which was promptly sent, eating away at the hard-earned treasury surplus built over the prior three years.