Negative Growth

DEFINITION of 'Negative Growth'

A contraction in a country's economy, as evidenced by a decrease in its gross domestic product (GDP) during any quarter of a given year. Negative growth is typically expressed as a negative percentage. Recurring periods of negative growth are one of the most commonly used measures to determine whether an economy is experiencing a recession or depression.

BREAKING DOWN 'Negative Growth'

Although the announcement of negative growth strikes fear into investors and consumers, it's just one of many factors that actually contribute to a recession or depression. In situations where negative growth is taking place but the real value of wages is increasing, consumers may still feel as if the economy is staying the same or getting better. In a similar fashion, when an economy experiences both positive GDP growth and high rates of inflation, people may feel that times are tough.

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