What is a Hard Landing?

A Hard landing is an economic concept that refers to a shift or downward turn of an economy that has rapidly experienced growth previously. This, in fact, is the government's attempt to control inflation.

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How is the term Hard Landing used in Economics?

A hard landing is coined from the aviation industry as this is defined as a high-speed landing of an airplane. This, in turn, defines a buoyant economy running to an abrupt downward shift in economic growth as a result of monetary policy. In recent times, as a result of recessions, the Federal Reserve has increased interest rates at several points.

China Example

China has experienced this downward shift (Hard landing), after years of high Gross Domestic Product growth rates. Often times, an increased level of debt results to this downturn. In late 2015, Socit Gnrale opines a Chinese hard landing at 30% judging from the devaluation of the yuan and the number of market shares. Later, trade volumes recovered and currency markets resume to normal. A Chinese recession would drastically affect manufacturers and leave a negative effect globally.

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