Definition & Meaning:

This is normally used to say that the size of a country's economy (measured by 'Gross Domestic Product (GDP)') has decreased. So if a country's GDP falls between one quarter (3-month period) and another (the GDP in April to June is less than that in January to March), it is called an 'economic downturn' or another term which you will learn below.

If this 'economic downturn' continues for 6 months (2 quarters) or more, then it is then called a 'recession'. If it continues for 2 years or more, it is called a 'depression'.

Confusingly, you may also hear people using economic downturn to describe the situation in an economy not only when it is decreasing in size, but also when the rate/level of GDP growth has fallen a lot (e.g. down from 3% to 0.25%), so be aware. To avoid confusion, instead of calling a decrease in the overall size of the economy an economic downturn, you can call it an 'economic contraction' instead.

When the rate of growth in an economy starts to decrease but not dramatically (e.g. it was 3.5%, but now it's 2.6%), it is not called an economic downturn, but an economic slowdown.

The opposite of 'economic downturn' is 'economic expansion' (where the economy is increasing or growing in size).

Pronunciation:

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Also Called:

Economic Contraction.

Related Vocabulary:

GDP, Recession, Economic Depression, Inflation.

Exercises:

To learn more vocabulary connected to economics, you can do a free online exercise on describing how the economy is performing.