Page 25 - Policy_Economic_Report_September2020
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Policy and Economic Report:
Oil & Gas Market
Lessons from Economics
What is an economic recovery?
The commencement of an economy, bouncing back from a recession and starting to expand again is termed as
an economic recovery. Once an economy has contracted and fallen into a recession, it enters a stage of
recovery before the cycle begins again.
Source: IG.com
The response to a recession is what will drive the type and speed of any economic recovery and will also play a
significant role in shaping the next period of expansion.
Inorder to judge the state of the economy and where it is headed, two types of indicators are essentially
monitored: lagging and leading indicators. While leading indicators can be used to help predict market
movements, lagging indicators confirm trends that are already taking place. The man lagging indicator usually
tends to be the gross domestic product (GDP). An economy only technically enters a recession once it has
reported two consecutive quarters of GDP contraction. An economy won’t exit recession and enter a recovery
until it starts to grow again.
Source: IG.com
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