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An economic slowdown is a period of slower economic growth, typically characterised by a decrease in the rate of growth of real gross domestic product (GDP). An economic slowdown can be caused by a variety of factors, including declining consumer and business confidence, rising unemployment, and slowing global trade.
- Diagram Showing Slower Economic Growth
- Slower Economic Growth Due to Weak Aggregate Demand
- Benefits of Lower Rates of Economic Growth
Slower economic growth due to low productivity growth. Suppose the economy used to have productivity growth of 3%. Then real GDP increases from Y1 to Y3, and therefore, we get strong economic growth. However, if productivity only increases by 1.5% a year, then the economy expands only from Y1 to Y2.
The other main cause of low economic growth is weak aggregate demand. If demand-side factors are weak, then the economy is more likely to experience a negative output gap – real GDP is less than potential GDP. In this case, there is a small increase in AD but productive capacity increases at a faster rate. This leads to a negative output gap(Y2 is ...
Environment. With lower rates of economic growth and lower rate of increasing national output, it will be easier to meet targets for reducing carbon emissions. If growth is very rapid, there is mor...Lower inflation. With lower growth rates, there is less inflationary pressures. This means the Central Bank can keep interest rates lower, which is good for borrowers, mortgage holders and the gove...Nov 21, 2023 · An economic slowdown is the moment before a recession when the economy stops experiencing significant growth. This is often evident in indicators like employment rates and...
- Economic slowdowns are caused by the public sector, private sector, or a combination of both. Specific factors like inflation and high-interest rat...
- Economic slowdowns have negative effects. Increasing unemployment, dropping income levels, and decreasing economic activity are common effects of e...
- The economy will theoretically slow down. This is considered a necessity for the economy to sustain a healthy growth trajectory.
Oct 14, 2024 · It represents the underlying, sustainable rate of growth that an economy can achieve over the long run, after accounting for fluctuations caused by the economic cycle. There are four recognisable points in the cycle. Peak/boom; slowdown/downturn; recession, recovery.
A slowdown refers to a gradual decline in the pace or rate of activity, progress, or growth within an economic, organizational, or social context. It indicates a period of reduced momentum or deceleration, often signaling a potential shift towards a more stagnant or recessionary state.
Jun 16, 2023 · A sluggish economy is a colloquial term for slow growth and disappointing economic conditions. Although it is frequently used in the media, the phrase has no formal definition.
Recession is used to signify a slowdown in general economic activity. They are are officially recognized after two consecutive quarters of negative GDP growth rates.
