Economic contraction occurs when a country's economy experiences negative growth for two consecutive quarters or more, resulting in lower production, employment, and investment levels. This phenomenon often leads to businesses cutting back on expenditures and lay-offs, as consumer spending decreases. The causes of economic contraction can include reduced consumer confidence, higher interest rates, reduced government spending, or adverse global economic conditions. During contraction, industries may face challenges as demand for goods and services diminishes, leading to reduced corporate profits and potential bankruptcies.