There is a difference between a recession and a slowdown. A recession is when the economy contracts for two straight quarters, not just one. A slowdown happens when the economy grows slower than usual. An engineering recession is when the central bank purposely slows down the economy to fight for issues such as inflation. It’s not that economy has any problems caused by any factors but a political movement to sustain the economy through battle inflation caused by the ongoing war. And the further question is how long this can be sustainable until? It is a tricky question because it depends on how long the war can drag on and what outcome both sides of the country will accept.
How does the central bank slow down the economy?
The central bank can slow down the economy by raising interest rates. When the economy is growing too quickly, the central bank will raise interest rates to slow down the pace of growth. Raising interest rates makes it more expensive for businesses to borrow money, making them less likely to expand. Conversely, when the economy is too slow, the central bank will cut interest rates to make it cheaper for businesses to borrow money. Making it more affordable for companies to borrow money makes them more likely to expand and hire more workers. The central bank can also buy government bonds from banks to make more cash available for businesses to borrow.
In this current market, the central bank forces the economy to slow down and fight against inflation. A purposely slowing down the economy causes the market to sell off and reduce debts. But fewer people are caring about where that money goes? Instead, they are pumping into the war zone. The war is costly and wasteful. It can bring down the country’s economy. But is it fair to make the global recession because one government wants to expand its political goal into another?