An economic downturn suggest the economy is entering into recession. A recession is a period of negative economic growth with falling output and rising unemployment. The official definition of a recession is - negative economic growth for 2 consecutive quarters.
The definition of an economic downturn is less strict. For example, many felt we were in an economic downturn even with positive growth. This was because the growth rate was slowing down, house prices were falling and people could see the economic cycle and shifted from a boom period and we were heading towards bust.
To define an economic downturn it is useful to mention some of the main features of an economic downturn:
- Negative or very low economic growth
- Rising unemployment
- Falling asset prices - shares and house prices
- Low confidence and falling investment
- Rising spare capacity
- Increasing government borrowing
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