Taloustaantuma

Taloustaantuma, often translated as economic recession, is a significant and prolonged decline in economic activity. It is typically characterized by a contraction in the gross domestic product (GDP), rising unemployment, falling consumer spending, and a decrease in business investment. A common informal definition of a recession is two consecutive quarters of negative GDP growth.

Recessions can be triggered by various factors. These include a sharp increase in interest rates, a bursting of asset bubbles like those in housing or stock markets, significant geopolitical events, or a sudden drop in demand for goods and services. The interconnectedness of the global economy means that a recession in one major country can often have ripple effects worldwide.

The consequences of a recession can be severe. Businesses may face reduced profits, leading to layoffs and hiring freezes. Consumers often cut back on spending, further dampening economic activity. Governments may see a decrease in tax revenues while facing increased demand for social welfare programs.

To combat recessions, governments and central banks typically employ economic stimulus measures. These can include lowering interest rates to encourage borrowing and spending, increasing government spending on infrastructure projects, or providing tax cuts. The goal of these policies is to boost demand and restore economic growth. The duration and severity of a recession can vary greatly, and recovery can sometimes be a slow process.