Connect with us

Recovery Speed

« Back to Glossary Index

What Is Recovery Speed?

Recovery speed refers to the rate at which business activities improve following a recent recession. 

Deeper Definition

Typically, gross domestic product (GDP) grows, earnings rise, and unemployment reduces as the economy recovers during an economic recovery. The economy also goes through a process of adaptation and adjustment to new conditions. These could be the reasons that caused the recession in the first place. They could also be the new policies and laws created by governments and central banks in reaction to the recession. Recovery is when an economy heals from the harm it has sustained and prepares for new growth. It is majorly about relocating resources and employees from failing enterprises and investments to new positions. However, recovery might take a short or lengthy period to take effect fully.

Government policies may occasionally aid or prevent the economic recovery process, which will eventually significantly impact the speed of recovery.

During an economic recovery, central banks may use monetary policies to increase the money supply and encourage lending. Market economies go through ups and downs for a variety of causes. All types of circumstances, including revolutions, financial crises, and global influences, can impact economies. Market fluctuations can often take on the appearance of a wave or cycle, with distinct periods of growth or boom, a peak leading to some economic catastrophe, a recession, and subsequent recovery.

Not every period of weak growth or even decline qualifies as a recession. The most frequent rule of thumb for a recession in the United States is two consecutive quarters of negative GDP growth. When talking about recovery speed, the focus is not usually on the recovery that the economy is currently experiencing alone but on time majorly.

Recovery Speed Example

If following a recession, the gross domestic product (GDP) rises swiftly in a short amount of time, incomes rise rapidly, and the unemployment rate declines significantly in a short period, it is reasonable to remark that the recovery pace of such an economy is swift. On the other hand, if the GDP takes a long time to expand and salaries do not rise quickly, among other benefits to the economy, you might conclude that the recovery rate is slow.

« Back to Glossary Index

Get the news right in your inbox