Is a country in economic downturn if its growth rate is negative, but improving?

Question

As I understand it, economic downturn means that economic growth is significantly slowing down or entering into recession. (If anyone wants to correct me, please do so). i.e. Growth rate is decreasing.But what if the country is already in recession, but its growth rate is increasing? i.e. -5% one year, -3% the next, -2.5% the next, etc. Is this still classed as downturn (since the economy is still shrinking) or is it not since the growth rate is actually increasing despite being negative?

Answer 1

Hi,

The country is most certainly in an economic downturn. In fact, the recession is continuing and getting deeper in the scenario you've described.

Let me compare this to the health of a person. If a person has a low level of Vitamin D and with each passing month the vitamin D level continues to drop, albeit at a slower pace than before, it won't be long before the person's bones become so weak that they'd break upon being exposed to a minimal shock. Only a rise in the level of Vitamin D signals an improvement in the person's health. Similarly, only an increase in the GDP signals a reversal of the downturn. Further declines, albeit at a slower pace, don't!

Regards,

Sujith