Preparing for the inevitable
IT may seem that we are overdue for a recession, given the historical trend showing a recession for the past two decades. As the phrase goes, “All good things must come to an end”. But are we heading for a recession in the near term?
Recession refers to a business cycle contraction which results in a general slowdown of a nation’s economic activity, measured by the Gross Domestic Product (GDP). It occurs when there is a prevalent fall in spending – an adverse demand shock – more likely triggered by several events such as a financial crisis, bursting of the economic bubble, or an external trade shock.
In response to recession, the government has, in the past, enforced expansionary macroeconomic policies to raise money supply, lower interest rates, increase government spending, and reduce taxes.
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