Within the economic context, stagflation is an economic situation that a country is going through, where inflation is combined with economic weakness, causing serious consequences for the nation's economy. Stagflation originates when the economy of a country is in recession and in addition to this, it has high inflation.
An economy with stagflation is a somewhat complicated scenario for governments since the increase in unemployment would coincide with the rise in the prices of goods and services and economic stagnation.
But how can you determine that a country is in stagflation?
Well, on the one hand, when there is a negative growth rate, that is, the Gross Domestic Product (GDP) decreases, prices continually rise, impoverishing the middle and lower classes of society and where there is difficulty in financing business projects..
This type of scenario is very common in mixed economies, due to different factors where societies originate organizational mechanisms such as so-called unemployment subsidies, labor market segmentation, etc.
The issue of stagflation is not something new, which is happening at present, of course not, since this situation has already occurred in the past, specifically in the 70s, where there was a strong increase in the prices of oil, which made inflation shoot up to a super high level; companies decreased their productivity and as a consequence workers were victims of massive layoffs, raising the unemployment rate.
The best economic strategy that can take a nation to be able to get out of this situation is through economic programs such as the promotion of greater competitiveness in the labor market, the implementation of an appropriate monetary policy, less intervention by the state in the economy market, boost the country's producer apparatus, encourage investment, etc. To name a few macroeconomic recommendations.
Currently there are several countries that are going through this situation, many of them are Latin American countries such as Argentina, Mexico and Venezuela, which have generated in each of them a strong economic crisis that is affecting their citizens.
