Monday, September 25, 2006

Soft landing and hard landing

What is soft landing?
Refers to a moderate slowing of economic growth to a rate of about 2% to 3%, which is expected to keep inflation from accelerating.

What is hard landing?
Refers to the state of economy falling somewhere between soft landing and recession. That is, economic slow down to 1% to 2% growth, which is good for containing inflation but teeters on the edge of recession.
Economy goes directly from a period of expansion to recession due to government or monetary authority more restrictive fiscal or monetary policy than what is appropriate for the economy.