Recession
A recession is a significant contraction in economic activity across an economy. Two successive quarters of falling real GDP are commonly described as a technical recession, but formal dating practices can consider a broader range of indicators. Output, employment and income may move at different times.
Worked example
A widespread fall in production and spending leads firms to cut investment and hiring. A single company’s declining sales would not establish that the whole economy is in recession.
Common mistake
Treating the two-quarter rule as a universal formal definition or using a fall in nominal GDP without considering inflation.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | BT | Direct | September 2026–June 2027 |
| FIA | FBT | Direct | September 2026–June 2027 |