Central Banks and Interest Rates
money supply
noun
Meaning
The total amount of money circulating in an economy, including cash and bank deposits, measured with categories such as M1 and M2.
Where you use it
Central banks influence the money supply through interest rates, bank reserves and asset purchases. Monetarist economists link fast growth in the money supply to inflation. The money supply grows, expands or contracts.
Examples
The M2 money supply grew by 30% last year, far faster than output.
When the central bank buys bonds, it increases the money supply.
Common phrases
growth in the money supply · expand the money supply · broad money supply · M2 money supply
More about this term →quantitative easing
noun
Meaning
A policy in which a central bank creates new money to buy large amounts of government bonds or other assets, aiming to lower long-term interest rates.
Where you use it
Usually shortened to QE. It was used widely after the 2008 crisis and during the pandemic by the Fed, the Bank of England, the ECB and the Bank of Japan, when policy rates were already close to zero. The reverse process is quantitative tightening (QT).
Examples
The Bank of England launched quantitative easing in 2009 to support the economy.
Critics argue that quantitative easing pushed up house and share prices.
Common phrases
a round of quantitative easing · launch quantitative easing · end quantitative easing · QE programme
More about this term →hawkish
adjective
Meaning
Favouring higher interest rates or tighter monetary policy because controlling inflation is seen as the top priority.
Where you use it
Market and media jargon for central bankers and their statements: a hawkish speech, a hawkish surprise, the hawks on the committee. A statement can sound more hawkish than expected, which usually strengthens the currency.
Examples
The governor's hawkish comments suggested that more rate hikes are coming.
Markets read the statement as hawkish, and bond yields jumped.
Common phrases
a hawkish stance · hawkish comments · sound hawkish · a hawkish surprise · the hawks
More about this term →dovish
adjective
Meaning
Favouring lower interest rates or looser monetary policy, usually because supporting growth and jobs seems more urgent than fighting inflation.
Where you use it
The opposite of hawkish and used in the same way: a dovish tone, a dovish shift, the doves on the committee. A dovish surprise tends to weaken the currency and push bond yields down.
Examples
The minutes were more dovish than expected, raising hopes of a rate cut.
Two members of the committee took a dovish line and voted to keep rates on hold.
Usage note
The bird dove rhymes with love, so dovish starts with the same vowel as love. Do not pronounce it like the American past tense of dive (dove, rhyming with stove).
Common phrases
a dovish tone · a dovish shift · turn dovish · the doves
More about this term →credit
noun
Meaning
Money that banks and other lenders make available to people, firms or governments, which must be paid back later, usually with interest.
Where you use it
Central to monetary policy: higher interest rates make credit more expensive and slow credit growth. News reports mention credit growth, consumer credit, credit conditions and a credit crunch, when banks suddenly stop lending. Credit is usually uncountable; for one sum you borrow, say a loan.
Examples
The central bank wants to slow credit growth to cool demand.
Small firms complain that credit has become too expensive.
Usage note
Turkish kredi çekmek is take out a loan in English, not take a credit.
Common phrases
credit growth · consumer credit · access to credit · credit crunch · tighten credit conditions
More about this term →real interest rate
noun
Meaning
An interest rate after taking away inflation; it shows how much more a lender really gets back in terms of what the money can buy.
Where you use it
Roughly calculated as the nominal interest rate minus inflation or expected inflation. When inflation is higher than the interest rate, the real rate is negative and savers lose purchasing power. Central banks and analysts discuss whether real rates are positive, negative or restrictive.
Examples
With inflation at 6% and the policy rate at 4%, the real interest rate is about minus 2%.
Savers lost out for years while real interest rates stayed negative.
Common phrases
negative real interest rates · positive real interest rate · ex-ante real interest rate · real rates
More about this term →tightening
noun
Meaning
A policy of making money and credit more expensive or harder to get, mainly by raising interest rates, in order to slow demand and bring inflation down.
Where you use it
Usually monetary tightening, but there is also fiscal tightening (tax rises or spending cuts). A tightening cycle is a series of rate hikes. The verb is tighten: the central bank tightened policy. The opposite is easing or loosening.
Examples
After two years of monetary tightening, inflation has finally started to fall.
Markets expect the tightening cycle to end this summer.
Common phrases
monetary tightening · tightening cycle · fiscal tightening · quantitative tightening · further tightening
More about this term →easing
noun
Meaning
A policy of making money and credit cheaper or easier to get, mainly by cutting interest rates, in order to support growth and employment.
Where you use it
Usually monetary easing. An easing cycle is a series of rate cuts; quantitative easing is easing through large asset purchases. Analysts discuss the pace of easing and whether easing is premature. The opposite is tightening.
Examples
The bank began its easing cycle with a cut of 25 basis points.
Some economists warn that premature easing could bring inflation back.
Common phrases
monetary easing · easing cycle · pace of easing · premature easing · further easing
More about this term →hold rates
phrase
Meaning
To leave interest rates unchanged at a central bank meeting, neither raising nor cutting them.
Where you use it
Very common in news about central bank decisions: the bank held rates at 5%, held rates steady, or kept rates on hold. The noun is a rate hold or a hold decision. Reporters usually add whether the decision was expected or surprised the markets.
Examples
The central bank is expected to hold rates steady at this week's meeting.
Most economists think the bank will hold rates until inflation falls further.
Usage note
The past form is held: the bank held rates, not holded.
Common phrases
hold rates steady · hold rates at · keep rates on hold · a hold decision
More about this term →monetary policy committee
noun
Meaning
The group of officials inside a central bank who meet regularly to decide on interest rates and other monetary policy tools.
Where you use it
Often shortened to MPC. The CBRT and the Bank of England both have a Monetary Policy Committee. The US equivalent is the FOMC, and at the ECB it is the Governing Council. The committee meets, votes and issues a statement.
Examples
The monetary policy committee voted to raise the policy rate by 50 basis points.
A summary of the monetary policy committee meeting will be published next week.
Common phrases
MPC meeting · MPC decision · MPC statement · MPC minutes · members of the MPC
More about this term →foreign exchange reserves
noun
Meaning
Assets in foreign currencies, such as dollars and euros, held by a central bank to pay for imports, repay foreign debt or support the national currency.
Where you use it
Often shortened to FX reserves or just reserves; together with gold they form a country's international reserves. Reserves rise, fall, are rebuilt or run down. Analysts discuss gross and net reserves and how many months of imports the reserves cover.
Examples
The central bank sold part of its foreign exchange reserves to slow the currency's fall.
Foreign exchange reserves now cover about six months of imports.
Common phrases
FX reserves · net reserves · gross reserves · rebuild reserves · reserve adequacy
More about this term →liquidity
noun
Meaning
How easily money is available in the financial system, or how quickly an asset can be turned into cash without losing value.
Where you use it
Central banks provide or drain liquidity through loans to banks and open market operations. A liquidity crunch happens when banks suddenly cannot borrow. Cash is the most liquid asset; a house is illiquid. The adjective is liquid.
Examples
The central bank injected liquidity into the banking system to calm the markets.
Small companies often face liquidity problems even when they are profitable.
Common phrases
inject liquidity · provide liquidity · liquidity crunch · excess liquidity · drain liquidity
More about this term →bond yield
noun
Meaning
The return an investor gets from holding a bond, shown as a yearly percentage; when bond prices fall, yields rise.
Where you use it
Government bond yields, especially the 10-year yield, are watched as a measure of borrowing costs and market confidence. Yields rise, jump, fall or ease. The difference between two yields is called a spread.
Examples
The ten-year bond yield rose to 4.5% after the inflation data.
Lower bond yields reduce the government's borrowing costs.
Usage note
Price and yield move in opposite directions: a sell-off in bonds means yields go up.
Common phrases
10-year bond yield · bond yields rose · benchmark bond yield · yield spread
More about this term →forward guidance
noun
Meaning
Communication by a central bank about the likely future path of interest rates, used to shape what markets and the public expect.
Where you use it
Became a major policy tool after 2008, when interest rates were close to zero. Guidance can be time-based (rates will stay low until next year) or data-dependent (until inflation falls below a certain level). Central banks give, change or drop forward guidance, and markets react to every word.
Examples
The bank's forward guidance suggests no rate cuts before the summer.
By changing its forward guidance, the central bank surprised the markets.
Common phrases
give forward guidance · change forward guidance · time-based forward guidance · data-dependent guidance
More about this term →Fiscal Policy and Public Finance
fiscal policy
noun
Meaning
The government's decisions about taxes and public spending, used to influence demand, growth, jobs and the state of the public finances.
Where you use it
Fiscal policy is expansionary (more spending or lower taxes) or contractionary and tight (less spending or higher taxes). It is run by the government and the finance ministry, and its main document is the annual budget.
Examples
The government used fiscal policy to support households during the crisis, sending direct payments to low-income families.
Economists warned that loose fiscal policy could work against the central bank's efforts to cut inflation.
Usage note
A fiscal year is a 12-month budget year. The UK government's fiscal year runs from April to March, while Türkiye's is the same as the calendar year.
Common phrases
expansionary fiscal policy · tight fiscal policy · fiscal discipline · fiscal stimulus · fiscal year
More about this term →budget deficit
noun
Meaning
The gap that appears when a government spends more than it collects in taxes and other revenue during a year; it is usually covered by borrowing.
Where you use it
Usually reported as a share of GDP: a budget deficit of 3% of GDP. Deficits widen or narrow; governments cut, reduce or finance them. The opposite is a budget surplus. In the EU, a deficit limit of 3% of GDP is a well-known benchmark.
Examples
The budget deficit widened to 4.5% of GDP as spending on pensions rose.
To close the budget deficit, the government plans to raise taxes on tobacco and alcohol.
Usage note
A deficit is a yearly gap (a flow); debt is the total amount owed (a stock), built up by past deficits. Deficit is stressed on the first syllable: DEF-i-cit.
Common phrases
a widening budget deficit · narrow the budget deficit · finance a budget deficit · budget surplus
More about this term →public debt
noun
Meaning
The total amount of money that a government owes to lenders at home and abroad, built up over years of borrowing.
Where you use it
Also called government debt, national debt or sovereign debt. It is usually compared with the size of the economy (the debt-to-GDP ratio). Governments borrow by issuing bonds; debt rises, piles up or is brought down, and its interest costs appear in the budget.
Examples
Public debt rose sharply during the pandemic as governments supported firms and workers.
Interest payments on public debt now take up a large part of the budget.
Usage note
The b in debt is silent: /det/. The borrower is the debtor and the lender is the creditor.
Common phrases
public debt rises · reduce public debt · public debt levels · service the debt · sovereign debt
More about this term →taxation
noun
Meaning
The system by which a government collects money from people and businesses through taxes on income, profits, spending and property.
Where you use it
A formal word used in economics, law and policy: direct taxation (such as income tax) and indirect taxation (such as VAT and excise duties), progressive taxation, double taxation. In everyday news people usually just say tax or taxes.
Examples
Indirect taxation, such as VAT, makes up a large share of government revenue in Türkiye.
Under progressive taxation, people with higher incomes pay a larger share of their income in tax.
Common phrases
progressive taxation · indirect taxation · double taxation · levels of taxation · taxation system
More about this term →government spending
noun
Meaning
Money that the state spends on public services, investment, salaries and social payments such as pensions; a key tool of fiscal policy.
Where you use it
Also public spending or public expenditure. Governments increase, cut or rein in spending. In the GDP formula C + I + G + NX, G covers only government purchases of goods and services, not transfers such as pensions.
Examples
Government spending on health and education rose faster than tax revenue.
To cut the deficit, the finance ministry plans to rein in government spending next year.
Common phrases
cut government spending · increase government spending · public spending · spending cuts · government spending on
More about this term →austerity
noun
Meaning
A policy of sharply cutting government spending, and sometimes raising taxes, in order to reduce a budget deficit or public debt.
Where you use it
Often heard in debates about Europe after the 2008 crisis and the euro area debt crisis. Governments impose or introduce austerity measures; critics argue that austerity can deepen recessions, while supporters say it restores confidence. Usually uncountable.
Examples
Several European governments introduced austerity measures after the debt crisis.
Years of austerity left little money for new roads and schools.
Common phrases
austerity measures · a period of austerity · impose austerity · austerity budget · anti-austerity
More about this term →stimulus
noun
Meaning
Extra government spending, tax cuts or central bank support designed to increase demand and lift a weak economy.
Where you use it
Usually fiscal stimulus (spending and taxes) or monetary stimulus (low rates, QE). Governments announce or unveil a stimulus package; economists debate whether it is too small, too big or poorly targeted. The verb is stimulate.
Examples
The government unveiled a stimulus package worth 2% of GDP.
Economists warned that more stimulus could push inflation higher.
Usage note
The plural stimuli belongs to science; in economics people usually say stimulus measures or stimulus packages.
Common phrases
a stimulus package · fiscal stimulus · monetary stimulus · withdraw stimulus · stimulus measures
More about this term →subsidy
noun
Meaning
Money or other support that a government gives to producers or consumers to lower the price of a product or to encourage an activity.
Where you use it
Common examples are farm subsidies, energy subsidies and support for public transport or electric cars. Governments grant, provide, cut or phase out subsidies. The verb is subsidise (UK) or subsidize (US): the government subsidises bread.
Examples
Energy subsidies kept electricity bills low but cost the budget billions.
Farmers receive subsidies for diesel and fertiliser.
Common phrases
energy subsidies · farm subsidies · phase out subsidies · government subsidy · subsidy for
More about this term →debt-to-GDP ratio
noun
Meaning
A country's public debt divided by its annual GDP and shown as a percentage; it shows how heavy the debt is compared with the size of the economy.
Where you use it
Used by governments, credit rating agencies and the IMF to judge the health of the public finances. In the EU, the Maastricht rules set a reference value of 60% of GDP. The ratio can fall even while debt grows, if nominal GDP grows faster.
Examples
The country's debt-to-GDP ratio rose above 100% after years of deficits.
Thanks to fast nominal growth, the debt-to-GDP ratio fell even though the government kept borrowing.
Common phrases
a high debt-to-GDP ratio · reduce the debt-to-GDP ratio · a debt-to-GDP ratio of · debt ratio
More about this term →default
verb
Meaning
To fail to pay interest or repay a loan or bond on time; the noun default describes this failure.
Where you use it
Countries, companies and households can default on their debts. A sovereign default, by a government, is rare and serious and usually leads to debt restructuring and loss of access to markets; Argentina's default in 2001 is a well-known case. Rating agencies assess the risk of default.
Examples
The company defaulted on its bonds after sales collapsed.
Investors fear the country could default on its foreign debt next year.
Usage note
In computing, default means a standard setting; in finance it always means failing to pay. The preposition is on: default on a loan.
Common phrases
default on a loan · default on its debt · sovereign default · risk of default · credit default swap
More about this term →public sector
noun
Meaning
The part of the economy owned, funded or run by the state, including government departments, public schools and hospitals, and state-owned companies.
Where you use it
Used with the: the public sector. Typical topics are public sector wages, public sector jobs and the public sector borrowing requirement. General government is a narrower statistical term covering central and local government plus social security funds.
Examples
Public sector workers will receive a pay rise in January.
The public sector employs about one in seven workers in the country.
Common phrases
public sector wages · public sector employment · public sector workers · public sector borrowing requirement
More about this term →budget
noun
Meaning
A government's plan of how much money it expects to collect and spend over the next year; the word also means the money available for a purpose.
Where you use it
Governments present and propose a budget; parliaments debate, pass and approve it. The result is a budget deficit, a budget surplus or a balanced budget. In the UK the annual Budget, presented by the Chancellor, is often written with a capital B.
Examples
The finance minister presented next year's budget to parliament on Monday.
The budget includes extra funding for schools and hospitals.
Common phrases
present the budget · pass a budget · balanced budget · budget surplus · budget cuts
More about this term →tax revenue
noun
Meaning
The money a government collects from taxes on income, profits, sales, property and other things during a given period.
Where you use it
Often expressed as a share of GDP so that countries can be compared. Tax revenues rise, fall or fall short of forecasts. Reports often split them into direct taxes (on income and profits) and indirect taxes (on spending, such as VAT).
Examples
Tax revenue rose faster than expected because of strong consumer spending.
The country collects tax revenue equal to about a quarter of GDP.
Common phrases
tax revenue as a share of GDP · boost tax revenue · tax revenues fell short · loss of tax revenue
More about this term →income tax
noun
Meaning
A tax that people pay on the money they earn from work, savings, rent and other sources, usually taken directly from wages.
Where you use it
A direct tax, usually progressive, with different rates for different income bands or brackets. People pay income tax; governments raise or cut it; employers withhold it from salaries. Companies pay corporate tax (UK: corporation tax) instead.
Examples
Workers in the top bracket pay income tax at the highest rate.
The government plans to cut income tax for low earners next year.
Common phrases
pay income tax · income tax bracket · income tax rate · cut income tax · income tax return
More about this term →VAT
abbreviation
Meaning
Short for value-added tax: a tax on spending that is added to the price of most goods and services at each stage of production and is finally paid by the consumer.
Where you use it
The main indirect tax in Turkey, the EU, the UK and most other countries; the US uses sales taxes instead. Prices include or exclude VAT, and some goods are VAT-exempt or zero-rated. It is said as V-A-T or as one word, vat.
Examples
All prices on the menu include VAT.
A cut in VAT on food would lower inflation for a few months.
Common phrases
VAT rate · including VAT · excluding VAT · VAT-exempt · raise VAT
More about this term →IMF
abbreviation
Meaning
Short for International Monetary Fund: an international organisation that monitors the world economy and lends to member countries facing balance of payments problems.
Where you use it
Founded in 1944 at the Bretton Woods conference and based in Washington. Countries agree an IMF programme, often with conditions on budgets and reforms. The IMF also publishes forecasts in its World Economic Outlook. Say it letter by letter: I-M-F.
Examples
The country asked the IMF for a loan to rebuild its reserves.
The IMF cut its forecast for global growth this year.
Common phrases
IMF programme · IMF loan · IMF forecast · turn to the IMF
More about this term →government bond
noun
Meaning
A debt security issued by a government to borrow money; the government promises to pay interest and to repay the full amount on a set date.
Where you use it
Governments issue, sell or auction bonds; investors buy and hold them. Names differ by country: Treasuries in the US, gilts in the UK, Bunds in Germany. Securities that mature in under a year are usually called bills.
Examples
The Treasury raised 20 billion lira at this week's government bond auction.
Pension funds buy government bonds because they are considered safe.
Common phrases
issue government bonds · government bond auction · 10-year government bond · government bond market
More about this term →progressive tax
noun
Meaning
A tax that takes a larger share of income from people who earn more, usually through higher rates on higher income brackets.
Where you use it
Most income tax systems, including Turkey's, are progressive. The opposite is a regressive tax, which takes a larger share of income from the poor; many taxes on spending work this way. A flat tax has one rate for everyone.
Examples
Under a progressive tax system, a surgeon pays a higher rate than a shop assistant.
Some economists argue that a more progressive tax system would reduce inequality.
Common phrases
progressive tax system · progressive income tax · highly progressive · regressive tax · flat tax
More about this term →tax evasion
noun
Meaning
Illegally paying less tax than you owe, for example by hiding income or not declaring sales.
Where you use it
A crime, unlike tax avoidance, which uses legal methods to reduce tax. Economists link tax evasion to the informal economy and to lost tax revenue, sometimes called the tax gap. Authorities crack down on or fight tax evasion.
Examples
The government says electronic invoicing has reduced tax evasion.
The business owner was charged with tax evasion after hiding income abroad.
Usage note
Do not mix up evasion (illegal) and avoidance (legal, though sometimes criticised).
Common phrases
crack down on tax evasion · tax evasion and avoidance · accused of tax evasion · fight tax evasion
More about this term →privatisation
noun
Meaning
The sale of state-owned companies or services to private owners, or handing over their management to the private sector.
Where you use it
Governments privatise companies to raise revenue, reduce debt or improve efficiency; critics worry about job losses and private monopolies. The opposite is nationalisation. In Turkey, sales are run by the Privatization Administration (ÖİB). US spelling: privatization.
Examples
The privatisation of electricity distribution raised billions for the Treasury.
Supporters say privatisation made the telecom sector more competitive.
Common phrases
privatisation programme · privatisation revenue · large-scale privatisation · nationalisation
More about this term →bailout
noun
Meaning
Financial help given by a government or an international body to a company, bank or country that is about to collapse or default.
Where you use it
Bailouts were common during the 2008 financial crisis and the euro area debt crisis. The phrasal verb is bail out: the government bailed out the banks. Critics warn of moral hazard, the risk that rescued firms will take bigger risks because they expect to be saved again.
Examples
The airline received a government bailout worth 3 billion euros.
Many taxpayers were angry about paying for bank bailouts.
Common phrases
bailout package · bank bailout · IMF bailout · receive a bailout · bail out the banks
More about this term →Trade and Exchange Rates
exchange rate
noun
Meaning
The price of one currency expressed in another, for example how many Turkish lira you need to buy one US dollar or one euro.
Where you use it
Exchange rates can be floating (set by the market), fixed or managed. The news says a currency strengthens or weakens against the dollar, and firms worry about exchange rate risk and volatility.
Examples
Exporters prefer a stable exchange rate because it makes long-term contracts easier to plan.
Under a floating exchange rate, the value of the currency is set by supply and demand in the market.
Common phrases
floating exchange rate · fixed exchange rate · exchange rate risk · exchange rate volatility
More about this term →export
noun
Meaning
A good or service sold to buyers in another country; as a verb, to sell goods or services abroad.
Where you use it
Usually plural in news and statistics: exports rose 6% last month. Countries export goods and services to markets abroad, and firms that do so are exporters. Tourism and software sold abroad count as service exports too.
Examples
Exports to Europe rose 6% last month, led by cars and textiles.
The country exports most of its fruit and vegetables to neighbouring markets.
Usage note
The stress moves with the part of speech: the noun is EX-port, the verb is ex-PORT. The same is true for import.
Common phrases
exports rise · export markets · export growth · export to · export-led growth
More about this term →import
noun
Meaning
A good or service bought from producers in another country; as a verb, to bring goods or services in from abroad.
Where you use it
Like exports, usually plural: energy imports, cheap imports. Countries import raw materials, energy and finished goods, and a high import bill can widen the trade deficit. Governments may put tariffs or quotas on imports.
Examples
Energy imports make up a large share of the country's import bill.
Factories import machinery and parts to produce goods for export.
Common phrases
energy imports · import bill · cheap imports · import duties · import from
More about this term →trade deficit
noun
Meaning
The gap that appears when the value of a country's imports of goods, and sometimes services, is greater than the value of its exports over a period.
Where you use it
Reported monthly: the trade deficit widened or narrowed. The opposite is a trade surplus. Note that the trade balance is only one part of the current account, which also includes income flows and transfers.
Examples
The trade deficit widened in August as energy imports rose.
A weaker currency can help to narrow a trade deficit by making exports cheaper.
Common phrases
a widening trade deficit · narrow the trade deficit · trade balance · trade surplus · trade deficit with
More about this term →tariff
noun
Meaning
A tax that a government charges on goods when they are imported, which makes foreign products more expensive compared with local ones.
Where you use it
Governments impose, raise, cut or lift tariffs on a product; if a trading partner retaliates with its own tariffs, a trade war can follow. Tariffs are the main tool of protectionism. In British English, tariff can also mean a price plan, such as an energy tariff.
Examples
The government imposed a 20% tariff on imported steel.
Tariffs are often passed on to consumers in the form of higher prices.
Usage note
The stress is on the first syllable: TAR-iff. It is spelled with one r and two fs.
Common phrases
impose a tariff on · lift tariffs · tariff barriers · retaliatory tariffs · tariff rates
More about this term →current account deficit
noun
Meaning
A shortfall that arises when a country pays more to the rest of the world for goods, services, income and transfers than it receives.
Where you use it
A key figure in emerging-market news, reported monthly and as a share of GDP. The deficit has to be financed by borrowing from abroad or by foreign investment, so a large one can leave a currency vulnerable. It widens, narrows or turns into a surplus.
Examples
The current account deficit narrowed to 2% of GDP as tourism revenue rose.
Energy imports are the main driver of the country's current account deficit.
Usage note
When a country has both a budget deficit and a current account deficit, economists call them the twin deficits.
Common phrases
a wide current account deficit · finance the current account deficit · current account surplus · narrow the current account deficit
More about this term →depreciation
noun
Meaning
A fall in the value of a currency against other currencies under a floating exchange rate, driven by market forces rather than an official decision.
Where you use it
The news says a currency depreciated by 10% against the dollar, or reports a sharp depreciation of the lira. The opposite is appreciation. Depreciation makes imports dearer and exports cheaper. In accounting, depreciation means the falling value of assets over time.
Examples
The depreciation of the currency pushed up the price of imported medicine.
A 20% depreciation against the euro made the country's hotels much cheaper for European tourists.
Common phrases
currency depreciation · a sharp depreciation · depreciation against the dollar · real depreciation
More about this term →devaluation
noun
Meaning
An official decision by a government or central bank to lower the value of its currency under a fixed or pegged exchange rate.
Where you use it
A policy decision, not a market movement: a country announces or carries out a devaluation. Historic examples include the UK's devaluation of the pound in 1967 and several Turkish devaluations before the lira was floated in 2001.
Examples
The devaluation made exports more competitive but raised the cost of living.
The central bank announced a 15% devaluation of the currency overnight.
Usage note
Turkish news often uses devalüasyon loosely for any sharp fall in the lira. In English, devaluation strictly means an official decision; a fall caused by the market is depreciation.
Common phrases
announce a devaluation · currency devaluation · competitive devaluation · a sharp devaluation
More about this term →comparative advantage
noun
Meaning
The ability of a country or person to produce something at a lower opportunity cost than others; it is the basis of the gains from trade.
Where you use it
An idea associated with David Ricardo (1817). It explains why countries gain by specialising even if one of them is better at producing everything (absolute advantage). Countries have, gain or lose a comparative advantage in a sector.
Examples
The country has a comparative advantage in textiles because of its skilled, relatively low-cost workforce.
In Ricardo's example, Portugal had a comparative advantage in wine and England in cloth.
Common phrases
have a comparative advantage in · the theory of comparative advantage · absolute advantage · lose comparative advantage
More about this term →protectionism
noun
Meaning
Policies that shield domestic producers from foreign competition, for example through tariffs, import quotas or subsidies.
Where you use it
Debated in the news and in trade theory. Supporters say it protects jobs and young industries; most economists warn that it raises prices and reduces efficiency. The adjective is protectionist: protectionist measures, protectionist pressure.
Examples
Rising protectionism has slowed the growth of world trade.
Trading partners criticised the new import quotas as protectionist.
Common phrases
rising protectionism · protectionist measures · a return to protectionism · protectionist policies
More about this term →foreign direct investment
noun
Meaning
Investment by a company from one country that gives it a lasting interest and control in a business in another country, such as building a factory.
Where you use it
Usually shortened to FDI. Statistics normally count a stake of 10% or more as direct investment; smaller purchases of shares are portfolio investment. Countries attract, encourage or compete for FDI, and inflows and outflows are reported every year.
Examples
Foreign direct investment in the car industry created thousands of jobs in the region.
The government cut red tape to attract more foreign direct investment.
Common phrases
attract FDI · FDI inflows · foreign direct investment in · greenfield investment
More about this term →balance of payments
noun
Meaning
A record of all money flows between a country and the rest of the world over a period, divided into the current account and the capital and financial account.
Where you use it
Compiled by central banks following IMF standards. In theory it always balances: a current account deficit is matched by net inflows in the financial account, such as foreign investment or borrowing. A balance of payments crisis happens when a country can no longer finance its deficit.
Examples
The balance of payments data show that foreign investors bought more government bonds in July.
The country turned to the IMF during a balance of payments crisis.
Common phrases
balance of payments data · balance of payments crisis · balance of payments statistics · capital and financial account
More about this term →free trade
noun
Meaning
International trade with few or no barriers such as tariffs, quotas or subsidies, so that goods and services move freely between countries.
Where you use it
Countries sign free trade agreements (FTAs) or create free trade areas. Supporters point to lower prices and the gains from comparative advantage; critics point to job losses in some industries. Türkiye's customs union with the EU, in force since 1996, goes further than a free trade area because it also has a common external tariff.
Examples
The two countries signed a free trade agreement that removes tariffs on most industrial goods.
Most economists argue that free trade raises overall income, even if some sectors lose out.
Common phrases
free trade agreement · free trade area · support free trade · free trade zone
More about this term →currency
noun
Meaning
The system of money used in a country, such as the lira, the euro or the dollar; foreign currency means money from other countries.
Where you use it
Used constantly in news on exchange rates: the local currency, a strong or weak currency, the currency fell against the dollar. Hard currency means a widely trusted currency such as the dollar or the euro. The plural is currencies.
Examples
The currency lost 5% against the dollar in a single week.
Many firms borrow in foreign currency but earn in local currency.
Common phrases
local currency · foreign currency · a weak currency · currency crisis · hard currency
More about this term →appreciation
noun
Meaning
A rise in the value of a currency compared with other currencies, so that it buys more foreign money than before; the opposite of depreciation.
Where you use it
Used for floating currencies whose value is set by the market; when a government raises a fixed rate, it is a revaluation. Appreciation makes imports cheaper and exports more expensive. The verb is appreciate: the euro appreciated against the dollar.
Examples
The appreciation of the currency has made imported cars cheaper.
Exporters complain that the sharp appreciation is hurting their sales.
Usage note
In everyday English appreciation means gratitude (I appreciate your help); in economics it means a rise in value.
Common phrases
currency appreciation · real appreciation · appreciation against the dollar · sharp appreciation
More about this term →globalisation
noun
Meaning
The process by which economies around the world become more connected through trade, investment, migration and the spread of technology and ideas.
Where you use it
A key word in debates about trade and jobs: the benefits and costs of globalisation, the winners and losers of globalisation. Since the late 2010s writers also discuss deglobalisation and slowbalisation, the idea that global integration has stalled.
Examples
Globalisation has lowered prices for consumers but put pressure on some factory jobs.
The pandemic made many firms rethink the risks of globalisation.
Usage note
Both spellings are correct: globalisation (British) and globalization (American). Use one spelling throughout a text.
Common phrases
economic globalisation · the benefits of globalisation · winners and losers of globalisation · deglobalisation
More about this term →trade balance
noun
Meaning
The value of a country's exports minus the value of its imports over a period; it is a surplus if exports are higher and a deficit if imports are higher.
Where you use it
Also called the balance of trade. It usually refers to goods only; adding services gives the balance of goods and services. The trade balance improves, worsens or swings into surplus, and it is a large part of the current account.
Examples
The trade balance improved as energy imports became cheaper.
A weaker currency does not always improve the trade balance quickly.
Common phrases
the trade balance improved · balance of trade · goods trade balance · trade balance data
More about this term →floating exchange rate
noun
Meaning
An exchange rate system in which the value of a currency is set by supply and demand in the foreign exchange market rather than fixed by the government.
Where you use it
The opposite is a fixed exchange rate or currency peg. Many systems lie in between, such as a managed float, where the central bank sometimes intervenes. Turkey moved to a floating exchange rate regime in February 2001. A currency floats or is allowed to float.
Examples
Under a floating exchange rate, the currency absorbs much of the shock.
The country abandoned its peg and adopted a floating exchange rate.
Common phrases
floating exchange rate regime · free float · managed float · allow the currency to float
More about this term →capital flows
noun
Meaning
Movements of money between countries for investment, such as buying shares, bonds, companies or property abroad, or lending to foreign borrowers.
Where you use it
Capital inflows come into a country and capital outflows leave it. Long-term flows include FDI, while short-term portfolio flows can reverse quickly. Emerging markets fear a sudden stop, when inflows dry up all at once. These flows appear in the financial account of the balance of payments.
Examples
Higher US interest rates can reverse capital flows to emerging markets.
Capital flows into the bond market surged after the rate hike.
Common phrases
capital inflows · capital outflows · portfolio flows · sudden stop · capital controls
More about this term →trade war
noun
Meaning
A conflict in which countries raise tariffs or put other limits on each other's imports, often in response to the other side's measures.
Where you use it
A media term rather than a technical one. Typical words are retaliate, retaliatory tariffs and escalate. Economists usually warn that trade wars raise prices and hurt growth on both sides; the tariff rises of the 1930s are a common historical example.
Examples
Exporters fear that the trade war will escalate further next year.
Economists warned that a trade war would push up prices for consumers on both sides.
Common phrases
escalate a trade war · retaliatory tariffs · all-out trade war · trade tensions
More about this term →customs union
noun
Meaning
An agreement between countries to remove tariffs on trade with each other and to apply the same tariffs to imports from outside the group.
Where you use it
It goes further than a free trade area, where each member keeps its own external tariffs. Turkey has been in a customs union with the EU since 1996; it covers industrial goods and processed agricultural products, but not services or most farm products.
Examples
Under the customs union, industrial goods move between Turkey and the EU without tariffs.
Members of a customs union must apply a common external tariff.
Common phrases
EU-Turkey customs union · common external tariff · join a customs union · modernise the customs union
More about this term →hot money
noun
Meaning
Short-term investment that moves quickly between countries to chase higher interest rates or quick gains, and can leave just as fast.
Where you use it
Informal but common in financial news. Hot money can strengthen a currency for a while but leaves an economy exposed to sudden outflows. The carry trade, borrowing in a low-rate currency to invest in a high-rate one, is a typical source. Compare long-term FDI.
Examples
High interest rates attracted hot money into local bonds.
When the mood changed, hot money left the country within weeks.
Common phrases
hot money inflows · hot money outflows · attract hot money · carry trade
More about this term →dollarisation
noun
Meaning
The use of the US dollar or another foreign currency instead of, or alongside, the national currency for saving, pricing or borrowing.
Where you use it
Full or official dollarisation means a country adopts the dollar as its currency, as Ecuador and Panama have done. Partial dollarisation is common where high inflation has made people keep savings in foreign currency. Reversing it is called de-dollarisation. US spelling: dollarization.
Examples
Years of high inflation led to widespread dollarisation of household savings.
Reducing dollarisation is one of the central bank's priorities.
Common phrases
deposit dollarisation · de-dollarisation · full dollarisation · partial dollarisation
More about this term →Development and Inequality
per capita
phrase
Meaning
For each person in a population; a total divided by the number of people, as in GDP per capita or income per capita.
Where you use it
From Latin, literally by heads. It can follow a noun (GDP per capita) or come before one (per capita income). It is the most common way to compare living standards between countries of very different sizes. In everyday English people also say per person.
Examples
Luxembourg has one of the highest levels of GDP per capita in the world.
Per capita income doubled over twenty years, but the gap between rich and poor regions widened.
Common phrases
GDP per capita · per capita income · per capita consumption · income per capita
More about this term →developing country
noun
Meaning
A country with a lower average income, less industrial output and weaker infrastructure than the rich industrialised countries.
Where you use it
A broad label used widely in the news and by international organisations, often contrasted with developed or advanced economies. Because the group is very diverse, the World Bank now mostly classifies countries by income level: low, lower-middle, upper-middle and high income.
Examples
Many developing countries depend heavily on exports of raw materials.
Access to affordable credit is a major challenge for small firms in developing countries.
Usage note
Third World is now considered outdated; use developing countries, low-income countries or the Global South instead.
Common phrases
developing countries · developing economies · the developing world · developed and developing countries
More about this term →emerging market
noun
Meaning
A middle-income economy that is growing and industrialising quickly and opening up to foreign trade and investment, such as Brazil, India or Türkiye.
Where you use it
Popular with investors and the financial media, often shortened to EM. Emerging markets are seen as offering higher growth but also higher risk, so their currencies and bonds often move together when global conditions change.
Examples
Emerging market currencies fell after US interest rates rose.
Investors are moving money back into emerging markets as global risk appetite improves.
Common phrases
emerging market currencies · emerging market economies · emerging market bonds · invest in emerging markets
More about this term →inequality
noun
Meaning
The unequal distribution of income, wealth or opportunities between people or groups in a society, or between countries.
Where you use it
Economists separate income inequality (what people earn) from wealth inequality (what they own). Inequality rises, widens or narrows, and taxes and transfers can reduce it. It is commonly measured with the Gini coefficient or the income share of the top 10%.
Examples
Income inequality has widened as the pay of top earners grew faster than average wages.
Regional inequality between the east and the west of the country remains large.
Common phrases
income inequality · wealth inequality · rising inequality · reduce inequality · regional inequality
More about this term →poverty line
noun
Meaning
The minimum level of income considered necessary to meet basic needs in a country; people living below it are counted as poor.
Where you use it
Each country sets its own national poverty line, and the World Bank uses an international line for extreme poverty, expressed in dollars per person per day at purchasing power parity. People live above or below the poverty line; it is also called the poverty threshold.
Examples
Around one in five households lives below the national poverty line.
Millions of people were lifted above the poverty line during the decades of fast growth.
Common phrases
below the poverty line · above the poverty line · national poverty line · international poverty line
More about this term →Gini coefficient
noun
Meaning
A number from 0 to 1 that sums up income inequality in a country: 0 means everyone has the same income, and 1 means one person has all of it.
Where you use it
Named after the Italian statistician Corrado Gini. It is sometimes shown on a scale of 0 to 100 (the Gini index). Reports say the Gini coefficient rose to 0.43. Rich European countries tend to have lower values than many countries in Latin America and southern Africa.
Examples
The country's Gini coefficient fell from 0.44 to 0.40 after the tax reform.
A Gini coefficient close to zero means that income is spread very evenly.
Usage note
Gini is pronounced JEE-nee, with a soft g as in gin.
Common phrases
the Gini coefficient rose · a high Gini coefficient · Gini index · measured by the Gini coefficient
More about this term →human capital
noun
Meaning
The knowledge, skills, health and experience of workers, seen as an asset that raises productivity and income in the same way as machines or buildings.
Where you use it
Used in growth and development economics and in policy reports: countries invest in human capital through education, training and health care. Human capital is built up, developed or lost, for example through brain drain.
Examples
Investing in human capital, especially early childhood education, pays off over decades.
Brain drain means the country is losing human capital that it paid to educate.
Common phrases
invest in human capital · human capital development · build human capital · human capital index
More about this term →informal economy
noun
Meaning
Economic activity that is not registered with or regulated by the state, such as unregistered workers and businesses that pay no tax or social security.
Where you use it
Also called the shadow economy, black economy or underground economy (some of these sound more negative). It matters in development economics because it is large in many middle- and low-income countries. Workers in the informal economy usually have no pension or health insurance.
Examples
Nearly a third of workers are employed in the informal economy, without social security.
Lower payroll taxes may encourage firms to bring workers out of the informal economy.
Common phrases
informal employment · informal sector · shadow economy · work in the informal economy
More about this term →sustainable development
noun
Meaning
Economic and social progress that improves living standards today while protecting the environment and natural resources, so that future generations can also meet their needs.
Where you use it
The idea became central after the Brundtland Report of 1987 and is now linked to the UN's 17 Sustainable Development Goals (SDGs), adopted in 2015. Governments, international organisations and companies use it in their reports and strategies.
Examples
The plan aims to combine growth with sustainable development by investing in renewable energy.
Clean water and quality education are among the UN's Sustainable Development Goals.
Common phrases
Sustainable Development Goals · promote sustainable development · sustainable development agenda · sustainable growth
More about this term →standard of living
noun
Meaning
How comfortably people live, judged by their income, housing, health care, education and access to goods and services.
Where you use it
Often measured roughly by GDP per capita or real income, though broader indicators such as the Human Development Index also exist. A standard of living rises, improves or falls; living standards is a common alternative, especially in British news.
Examples
Productivity growth is the key to a higher standard of living in the long run.
High inflation has eroded the standard of living of pensioners.
Usage note
Standard of living (how well people live) is not the same as cost of living (how much it costs to live).
Common phrases
raise the standard of living · a high standard of living · living standards · fall in living standards
More about this term →infrastructure
noun
Meaning
The basic physical systems a country needs to function, such as roads, railways, ports, power lines, water supply and telecommunications.
Where you use it
Central to growth and development debates: infrastructure investment, infrastructure spending, infrastructure projects. Governments build, upgrade and maintain infrastructure, sometimes through public-private partnerships (PPPs). Social infrastructure means schools and hospitals. The word is uncountable.
Examples
Poor infrastructure raises transport costs for exporters.
The plan includes major infrastructure projects such as new ports and rail lines.
Common phrases
infrastructure investment · infrastructure projects · transport infrastructure · upgrade infrastructure
More about this term →advanced economy
noun
Meaning
A rich, highly developed country with high income per person, modern industries and services, and well-established institutions.
Where you use it
The IMF divides the world into advanced economies and emerging market and developing economies. Advanced economies include the US, Japan, Germany and South Korea. Developed country is a common synonym; the old term First World is now rarely used.
Examples
Growth in advanced economies is expected to stay below 2% next year.
Ageing populations are a challenge for most advanced economies.
Common phrases
advanced economies · advanced and emerging economies · major advanced economies · developed country
More about this term →income distribution
noun
Meaning
How a country's total income is shared out among its people or households, from the poorest to the richest.
Where you use it
Often described by splitting the population into five groups (quintiles) or ten groups (deciles) and comparing their shares of income, or by a single number such as the Gini coefficient. Debates focus on whether income distribution is becoming more or less equal.
Examples
According to the latest income distribution data, the richest 20% receive almost half of total income.
Taxes and social transfers can make income distribution more equal.
Common phrases
unequal income distribution · income distribution statistics · top income decile · bottom quintile
More about this term →redistribution
noun
Meaning
The transfer of income or wealth from some groups to others, mainly from richer to poorer people, through taxes, benefits and public services.
Where you use it
A central topic in public finance and politics: how much redistribution a country should do, and whether it weakens incentives to work. The main tools are progressive taxes, transfer payments, pensions and free public services. The verb is redistribute.
Examples
In the Nordic countries, taxes and benefits achieve a large redistribution of income.
Economists debate how much redistribution is possible without harming growth.
Common phrases
income redistribution · redistribution of wealth · redistribution through taxes · redistributive policies
More about this term →brain drain
noun
Meaning
The movement of highly educated or skilled people, such as doctors, engineers and scientists, to another country that offers better pay or conditions.
Where you use it
A concern for many developing and middle-income countries, which lose human capital they paid to educate. The opposite ideas are brain gain and brain circulation, when emigrants return or keep working links with home. Countries try to stop, reverse or slow the brain drain.
Examples
The brain drain of young doctors is putting pressure on public hospitals.
Better research funding could help slow the brain drain.
Common phrases
reverse the brain drain · brain drain of doctors · brain gain · suffer a brain drain
More about this term →extreme poverty
noun
Meaning
The most severe form of poverty, when people do not have enough income to meet even basic needs such as food, clean water and shelter.
Where you use it
Measured by the World Bank with an international poverty line in dollars per person per day, adjusted for purchasing power and updated from time to time. Ending extreme poverty is the first target of the UN Sustainable Development Goals. People live in, or are lifted out of, extreme poverty.
Examples
The share of the world's population living in extreme poverty has fallen sharply since 1990.
Cash transfers have helped lift millions of families out of extreme poverty.
Common phrases
live in extreme poverty · end extreme poverty · lift people out of extreme poverty · absolute poverty
More about this term →Human Development Index
noun
Meaning
A UN measure that ranks countries by combining life expectancy, years of schooling and income per person into a single score between 0 and 1.
Where you use it
Published by the United Nations Development Programme (UNDP) in its Human Development Report since 1990, and usually shortened to HDI. It was designed to show that development means more than GDP per capita. Countries are grouped as very high, high, medium or low human development.
Examples
Norway and Switzerland are usually near the top of the Human Development Index.
The country's Human Development Index score has improved thanks to better schooling.
Common phrases
HDI ranking · Human Development Report · very high human development · HDI score
More about this term →middle-income trap
noun
Meaning
A situation in which a country grows quickly to middle income but then stalls and fails to reach high income, often because growth based on cheap labour runs out.
Where you use it
The term became popular through World Bank research in the late 2000s. The usual cure discussed is a shift to growth based on innovation, education and productivity, though some economists question whether the trap really exists. Countries fall into, are stuck in or escape the middle-income trap.
Examples
South Korea is often cited as a country that escaped the middle-income trap.
Without higher productivity, the economy risks falling into the middle-income trap.
Common phrases
escape the middle-income trap · stuck in the middle-income trap · fall into the middle-income trap · upper-middle-income country
More about this term →Economic News and Data
forecast
noun
Meaning
An estimate of future economic figures, such as growth, inflation or unemployment, based on data and models; it is also used as a verb.
Where you use it
Institutions such as the IMF, the World Bank and central banks publish forecasts and then raise, revise up, cut or revise down their forecasts. The past tense of the verb is forecast or forecasted: the IMF forecast 3% growth.
Examples
The IMF cut its growth forecast for the euro area to 1.1%.
Most economists forecast that inflation will fall below 5% by the end of next year.
Common phrases
growth forecast · revise a forecast · cut its forecast · inflation forecast · economic forecast
More about this term →percentage point
noun
Meaning
The simple difference between two percentages: a rise from 3% to 5% is an increase of two percentage points, not of 2%.
Where you use it
Essential for reading news about rates: unemployment rose by half a percentage point; the bank raised rates by two percentage points. Often shortened to points in speech and to pp or ppt in writing.
Examples
Unemployment fell by 0.3 percentage points to 8.9%.
The central bank raised its policy rate by five percentage points in a single meeting.
Usage note
If inflation goes from 10% to 15%, it has risen by 5 percentage points but by 50 percent. Mixing these up is a very common mistake in both Turkish and English news.
Common phrases
by one percentage point · half a percentage point · a percentage point rise · percentage points higher
More about this term →year-on-year
adjective
Meaning
Compared with the same period one year earlier, for example sales in March this year compared with sales in March last year.
Where you use it
Standard in data releases, often written y/y or YoY: inflation was 3.4% year-on-year. It works as an adjective (a year-on-year increase) or an adverb (prices rose 3% year on year). American English prefers year over year. Compare month-on-month and quarter-on-quarter.
Examples
Retail sales rose 4.2% year-on-year in September.
Prices were up 0.5% on the month and 3.8% year on year.
Common phrases
year-on-year growth · year-on-year increase · rise year on year · month-on-month · quarter-on-quarter
More about this term →soft landing
idiom
Meaning
A slowdown in economic growth that is just enough to bring inflation down without causing a recession or a big rise in unemployment.
Where you use it
An aviation metaphor used by central bankers, analysts and journalists. Central banks aim for, engineer or achieve a soft landing; the opposite is a hard landing, a sharp slowdown or recession. Many economists cite the US in 1994-95 as a successful example.
Examples
The central bank hopes to achieve a soft landing, cooling inflation without pushing up unemployment.
A soft landing is hard to engineer, and history shows that many tightening cycles ended in recession.
Common phrases
achieve a soft landing · engineer a soft landing · hopes of a soft landing · hard landing
More about this term →headwinds
noun
Meaning
Conditions that make economic progress harder, such as high interest rates, weak demand abroad or rising energy prices.
Where you use it
A metaphor from sailing and flying, very common in company reports, IMF statements and the news. Usually plural: the economy faces headwinds; headwinds are mounting or easing. The opposite is tailwinds, conditions that help growth.
Examples
The economy faces strong headwinds from high borrowing costs and weak exports.
The company said global headwinds would hurt its sales next year.
Common phrases
face headwinds · strong headwinds · economic headwinds · headwinds and tailwinds · global headwinds
More about this term →basis point
noun
Meaning
One hundredth of a percentage point (0.01%), used to describe small changes in interest rates and bond yields precisely.
Where you use it
Standard in central bank and market news: the bank raised rates by 25 basis points, a quarter of a percentage point. Written bp or bps, and often pronounced bips by traders. 100 basis points equal one percentage point.
Examples
The central bank raised its policy rate by 250 basis points to 17.5%.
Ten-year bond yields fell 15 basis points after the inflation data.
Common phrases
25 basis points · raise rates by 50 basis points · a 100-basis-point cut · basis points higher
More about this term →seasonally adjusted
adjective
Meaning
Changed by statistical methods to remove regular seasonal effects, such as holiday shopping or summer tourism, so that the underlying trend is easier to see.
Where you use it
Appears in almost every data release on jobs, output and sales: the seasonally adjusted unemployment rate, seasonally adjusted figures. Unadjusted numbers can mislead; unemployment, for example, often rises in winter for purely seasonal reasons. Shortened to SA.
Examples
The seasonally adjusted unemployment rate was unchanged at 8.5%.
On a seasonally adjusted basis, industrial production rose 1.1% from the previous month.
Common phrases
seasonally adjusted figures · on a seasonally adjusted basis · seasonally adjusted rate · not seasonally adjusted
More about this term →bubble
noun
Meaning
A situation in which the price of an asset such as housing or shares rises far above its real value because buyers expect it to keep rising, until it eventually collapses.
Where you use it
Bubbles form, inflate and eventually burst or pop. Famous examples include the dot-com bubble of the late 1990s and the US housing bubble before 2008. People often argue about whether a bubble exists until it bursts.
Examples
When the housing bubble burst, prices fell by a third in two years.
Some analysts warn that cheap credit is creating a bubble in the property market.
Common phrases
housing bubble · the bubble bursts · asset bubble · speculative bubble · dot-com bubble
More about this term →pick up
phrasal verb
Meaning
To increase or improve after a slow or weak period, as when growth, demand, sales or inflation start to rise again.
Where you use it
Very common in economic news and analysts' comments, used without an object: growth picked up in the second quarter; inflation is picking up. The noun is pickup or pick-up: a pickup in demand. The opposite is slow down.
Examples
Growth picked up in the second quarter as exports recovered.
Economists expect demand to pick up once interest rates start to fall.
Usage note
In general English pick up has many meanings, such as collecting someone or learning a language without studying; in economic texts it almost always means increase or speed up.
Common phrases
growth picks up · demand picks up · a pickup in · pick up pace · pick up speed
More about this term →slowdown
noun
Meaning
A period in which economic growth or activity continues but at a slower pace than before; it is milder than a recession.
Where you use it
Very common in news and forecasts: a slowdown in growth, a global slowdown, a sharp or gradual slowdown. The phrasal verb is slow down: growth slowed down. Writers choose slowdown to make clear that the economy is still growing.
Examples
The central bank expects a mild slowdown rather than a recession.
A slowdown in the euro area has hurt demand for the country's exports.
Common phrases
a slowdown in growth · global slowdown · sharp slowdown · economic slowdown
More about this term →outlook
noun
Meaning
What is expected to happen to an economy, market or indicator in the coming months or years.
Where you use it
Used in reports, speeches and headlines: the economic outlook, the inflation outlook, the outlook for growth. The outlook improves, darkens or is uncertain. The IMF publishes its World Economic Outlook twice a year, and rating agencies give countries a stable, positive or negative outlook.
Examples
The economic outlook has darkened since the summer.
The agency raised the country's outlook from stable to positive.
Common phrases
economic outlook · inflation outlook · outlook for growth · the outlook darkens · stable outlook
More about this term →financial crisis
noun
Meaning
A sudden and serious breakdown in the financial system, for example when banks fail, asset prices collapse or a country can no longer borrow.
Where you use it
The global financial crisis of 2007–2009 is discussed so often that it is shortened to GFC. A banking crisis, a currency crisis and a debt crisis are types of financial crisis. A crisis breaks out, spreads and is contained. The plural is crises.
Examples
Many banks needed public support during the financial crisis of 2008.
It took the country almost a decade to recover from the financial crisis.
Usage note
Crisis is pronounced CRY-sis, and the plural crises is CRY-seez.
Common phrases
global financial crisis · a financial crisis breaks out · in the wake of the financial crisis · banking crisis
More about this term →rebound
noun
Meaning
A quick rise back up after a fall, for example in growth, prices, demand or the value of a currency.
Where you use it
Common in headlines: a strong rebound in growth, a rebound in oil prices. It is also a verb: sales rebounded in May. A rebound is usually faster and shorter than a full recovery.
Examples
Tourism revenue showed a strong rebound after the pandemic.
Oil prices rebounded after falling for three weeks.
Usage note
The noun is stressed on the first syllable (REE-bound) and the verb on the second (ri-BOUND).
Common phrases
a strong rebound · rebound in growth · rebound in demand · sharp rebound · rebound strongly
More about this term →month-on-month
adjective
Meaning
Compared with the previous month; used to describe how a figure such as prices or sales changed from one month to the next.
Where you use it
Shortened to m/m or MoM in data tables. It shows the latest momentum, while year-on-year compares with the same month a year earlier. GDP is usually compared quarter-on-quarter (q/q). It can also work as an adverb: prices rose 1.2% month-on-month.
Examples
Consumer prices rose 1.2% month-on-month and 9% year-on-year.
Retail sales were flat on a month-on-month basis.
Common phrases
month-on-month increase · on a month-on-month basis · m/m · quarter-on-quarter
More about this term →ease
verb
Meaning
To become less strong or severe, as when inflation, price pressures or market tensions go down; for a central bank, to make policy less strict.
Where you use it
A favourite verb in economic news because it sounds calm: inflation eased to 3.1%, price pressures are easing, supply problems eased. With an object it means loosen: the bank eased policy, eased lending rules. It is softer than fall or drop.
Examples
Annual inflation eased to 3.1% in June from 3.4% in May.
Pressure on the currency eased after the central bank's announcement.
Common phrases
inflation eased · price pressures ease · ease policy · ease restrictions · ease slightly
More about this term →widen
verb
Meaning
To become larger, used for a gap between two figures such as a deficit, the difference between two interest rates or the gap between rich and poor.
Where you use it
Used constantly with deficits and gaps: the budget deficit widened, the current account deficit widened to 4% of GDP, the gap between rich and poor has widened. The noun is widening. The opposite is narrow.
Examples
The current account deficit widened to 5% of GDP last year.
The gap between bond yields in the two countries has widened sharply.
Common phrases
the deficit widened · widen sharply · a widening gap · widen to
More about this term →narrow
verb
Meaning
To become smaller, used for a gap between two figures such as a deficit, the difference between two interest rates or a difference in pay.
Where you use it
The opposite of widen: the trade deficit narrowed, the gender pay gap is narrowing. It can also take an object: measures to narrow the deficit. As an adjective, narrow means small or limited: a narrow majority, a narrow definition of money.
Examples
The trade deficit narrowed in March as imports fell.
The government hopes higher tax revenue will narrow the budget gap.
Common phrases
the deficit narrowed · narrow the gap · narrow sharply · a narrowing deficit
More about this term →surge
verb
Meaning
To rise suddenly and strongly, used for prices, demand, sales, borrowing or other figures; also a noun for such a rise.
Where you use it
A dramatic headline verb, stronger than rise or increase: oil prices surged, imports surged 20%. As a noun: a surge in demand, a surge in inflation. The opposite in headlines is plunge or slump.
Examples
Gold prices surged to a record high as investors looked for safety.
A surge in car imports widened the trade deficit.
Common phrases
a surge in demand · prices surged · a sudden surge · surge to a record high
More about this term →slump
noun
Meaning
A sudden large fall in prices, sales or activity, or a long period when the economy or a market is very weak.
Where you use it
A strong, slightly informal word in news: a slump in house prices, a slump in demand, the global slump of the 1930s. It is also a verb: sales slumped 15%. It is stronger than a fall or a dip.
Examples
The slump in car sales has forced the plant to cut shifts.
Exports slumped as demand in Europe collapsed.
Common phrases
a slump in demand · housing slump · sales slumped · deep slump · global slump
More about this term →beat expectations
phrase
Meaning
To be better or higher than economists and markets had predicted, used for data such as growth, jobs or company profits.
Where you use it
Data are compared with the consensus forecast, the average of economists' predictions. Figures beat, meet or miss expectations, or come in above or below expectations. For inflation a higher figure is bad news, so reporters usually say above expectations instead.
Examples
GDP growth beat expectations, rising 1.1% in the third quarter.
The company's profits beat expectations despite weak sales.
Common phrases
comfortably beat expectations · miss expectations · meet expectations · consensus forecast · come in above expectations
More about this term →revise
verb
Meaning
To change an earlier figure or forecast after new information becomes available, making it higher or lower.
Where you use it
Used with up or upward and down or downward: the IMF revised its growth forecast down; GDP was revised up to 2.3%. Statistics offices revise earlier data as more complete information arrives. The noun is revision: an upward revision.
Examples
The central bank revised its year-end inflation forecast up to 8%.
First-quarter growth was revised down from 0.6% to 0.4%.
Usage note
In British English revise also means to study for an exam; in economic news it always means to correct or update a figure.
Common phrases
revise up · revise down · upward revision · revised figures · revise a forecast
More about this term →consumer confidence
noun
Meaning
How optimistic households feel about their finances and the economy, measured by monthly surveys that ask about income, jobs and plans to spend.
Where you use it
Reported as an index: consumer confidence rose, fell or hit a record low. Analysts use it to predict consumer spending. In Turkey, TurkStat and the central bank publish a consumer confidence index on which values above 100 show optimism and values below 100 show pessimism.
Examples
Consumer confidence fell to its lowest level in two years.
Rising consumer confidence suggests that spending will pick up.
Common phrases
consumer confidence index · consumer confidence fell · boost consumer confidence · business confidence
More about this term →shock
noun
Meaning
A sudden, unexpected event that has a large effect on an economy, such as a jump in oil prices, a natural disaster or a financial crisis.
Where you use it
Economists divide shocks into supply shocks, which raise costs or cut production, and demand shocks, which change spending. Common phrases are an oil shock, an external shock and a negative or positive shock. Economies absorb, withstand or are hit by shocks.
Examples
The drought was a supply shock that pushed food prices sharply higher.
Large reserves help an economy absorb external shocks.
Common phrases
supply shock · demand shock · oil shock · external shock · absorb a shock
More about this term →base effect
noun
Meaning
The effect on a year-on-year rate caused by an unusually high or low figure in the same month of the previous year, rather than by current changes.
Where you use it
Common in inflation commentary: if prices jumped a year ago, annual inflation falls when that month drops out of the calculation, which is called a favourable base effect. Analysts say base effects will push inflation up or down in the coming months.
Examples
Annual inflation will drop next month because of a strong base effect from last year's energy price rise.
Part of the fall in inflation is just a base effect, not a real change in price trends.
Common phrases
favourable base effect · unfavourable base effect · base effects · due to base effects
More about this term →