Economic crises are a major global risk studied in IB Geography, particularly within the Global Risks and Resilience unit. An economic crisis occurs when a country or the global economy experiences a sharp downturn, often involving recession, financial instability, unemployment, and reduced trade. Because the global economy is highly interconnected, economic crises can quickly spread across borders and affect global resilience.

One of the most significant impacts of economic crises is on employment and livelihoods. During downturns, businesses may close or reduce operations, leading to rising unemployment and underemployment. Loss of income reduces household resilience, making it harder for people to cope with additional shocks such as health emergencies or environmental hazards. Vulnerable groups, including low-income workers and informal employees, are often the most affected.

Economic crises also reduce government capacity to respond to risks. Falling tax revenues and rising public debt limit spending on healthcare, education, infrastructure, and social protection. This weakens a country’s ability to prepare for and respond to future crises, including natural disasters and climate change. In IB Geography, this highlights the link between economic stability and long-term resilience.

Global economic crises can disrupt trade and supply chains. Reduced demand, trade restrictions, and financial instability affect the movement of goods and resources worldwide. Countries that depend heavily on exports or tourism are particularly vulnerable. Disruptions to food, energy, and medical supply chains can create shortages and increase prices, further reducing resilience.

Economic crises also tend to increase inequality. Wealthier individuals and countries often recover more quickly due to access to savings, credit, and government support. In contrast, poorer communities may experience long-term setbacks in health, education, and employment. Rising inequality weakens social cohesion and reduces collective resilience to future risks.

In IB Geography, it is important to recognise that economic crises often interact with other global risks. Financial instability can increase political unrest, reduce investment in climate adaptation, and weaken international cooperation. This creates a cycle where crises reinforce one another, making recovery more difficult.

However, economic crises can also create opportunities for building resilience. Some governments use crises as a chance to reform financial systems, strengthen social safety nets, and invest in sustainable development. Recovery strategies that focus on inclusivity, diversification, and long-term planning can improve resilience to future shocks.

Overall, economic crises reduce global resilience by weakening livelihoods, government capacity, and social stability. Their impacts are uneven and interconnected, highlighting the importance of preparedness, diversification, and cooperation.

RevisionDojo helps IB Geography students analyse economic crises clearly, linking global risks to resilience and supporting strong, exam-ready evaluation.