What are the effects of political instability on economic growth? 🔊
Political instability adversely affects economic growth by creating an environment of uncertainty that can deter investment and disrupt economic activities. Businesses may hesitate to commit resources in politically volatile situations, leading to reduced economic output and lower job creation. Moreover, instability can cause inflation, currency depreciation, and increased public debt, further straining economic conditions. Citizens may also experience worsening living standards as resources are diverted from essential services to maintain social order or respond to crises. In such contexts, governments often struggle to implement effective policies, perpetuating a cycle of instability and economic decline.
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