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Economics vocabulary · GDP and Growth

Contraction

Meaning in economics, with examples

/kənˈtrækʃn/nounCommon term

In economics, contraction means: A fall in economic activity or output over a period, for example when GDP is lower than in the previous quarter.

In Turkish: daralma, küçülme

How it is used

A neutral, technical word used in data releases and reports: a contraction of 0.3%, the economy is in contraction. The verb is contract: GDP contracted. In PMI surveys, a reading below 50 signals contraction. The opposite is expansion.

Example sentences

  1. The economy suffered a contraction of 1.2% in the first quarter.

  2. A manufacturing PMI of 47 points to a contraction in factory activity.

Common collocations

  • economic contraction
  • a sharp contraction
  • contraction in output
  • slip into contraction
  • expansionThe phase of the business cycle when output, jobs and incomes are growing, lasting from the low point after a recession to the next peak.
  • recessionA significant fall in economic activity lasting months, with falling output, income and jobs; often defined as two quarters in a row of shrinking GDP.
  • GDPShort for gross domestic product: the total value of all final goods and services produced within a country in a given period, usually a quarter or a year.
  • slowdownA period in which economic growth or activity continues but at a slower pace than before; it is milder than a recession.
  • business cycleThe repeated pattern of ups and downs in economic activity, moving from expansion to a peak, then to contraction and a low point, and back to recovery.

This word in other fields

The same English word can have a different meaning in another field:

More terms: GDP and Growth

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This page explains English vocabulary for learners. It is not financial advice.