A decline in value over a stated period
What is Negative Growth?
Negative growth implies a decline in value over a stated period. It is commonly observed in economic, industry, and business analysis. Typically, negative growth is expressed as a percentage over a period of time.
Summary
- Negative growth implies a decline in value over a stated period.
- Negative growth in the economy occurs when the gross domestic product (GDP) reduces year over year.
- It can be commonly observed in the maturity and relative decline stage of the industry life cycle.
Negative Growth in an Economic Context
A country’s economy can experience negative growth when its gross domestic product (GDP) reduces year over year. GDP refers to the dollar value of all final goods and services produced within a country’s borders in a given year. The four primary drivers of GDP are individual consumption expenditure, investment, net exports, and governmental expenditure.
If a country’s real gross domestic product declines for two or more quarters, it is indicative of a recession in the business cycle. Negative growth rates are often accompanied by declining real income, increasing unemployment, and reduced production.
Negative Growth in Business
Negative growth can be identified in business by conducting horizontal analysis to identify year over year declines. A horizontal analysis involves contrasting financial results across several fiscal periods to illustrate a trend. Accurately identifying negative growth can be performed on a nominal basis or a proportionate basis.
Identifying negative nominal growth is achieved when comparing an account balance year over year. It is a useful metric to assess if a business is shrinking in terms of scale. For example, say a company’s property, plant, and equipment (PP&E) is declining year over year; it can be inferred that the company is selling off or disposing of its capital assets. Ultimately, it can imply a reduction in expected future cash flows to be generated from its productive assets.
Identifying proportionate negative growth is achieved by making financial statements common size. The financial statements can be made common size by dividing balance sheet accounts by total assets or by dividing income sheet accounts by total revenues.
Horizontal analysis of common size financial statements allows for the observation of trends over a period of time. For example, if there is negative growth between the common size cost of goods sold accounts year over year, it would imply that the growth in the company’s revenues has been quicker than that of its cost of goods sold, boosting its gross profitability.
Observing Negative Growth in the Industry Life Cycle
The industry life cycle is a theoretical framework used to analyze the maturity of an industry. The four stages of the industry life cycle are:
1. Start-up stage
The start-up stage is a period where industry players see rapid increasing growth. It is often difficult to identify the industry leaders, as all industry players experience substantial risk. Generally, the start-up stage is characterized by disruptive technology and offers the potential for large-scale growth.
2. Consolidation stage
The consolidation stage is a period of stable positive growth, where industry players begin to emerge. It is characterized by a few companies controlling a sizable amount of market share. Overall, industries at the consolidation stage grow faster than the economy.
3. Maturity stage
The maturity stage represents the period where industry players all offer similar value propositions, and competition is primarily driven on a price basis. It leads to reduced negative growth in profit margins for industry players.
4. Relative decline stage
The relative decline stage shows an industry growing slower than the economy. At such a stage, it is common to see minimal or negative growth in market share and profitability.
Related Readings
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FAQs
Negative growth is a decline in a company's sales or earnings, or a decrease in an economy's GDP during any quarter. Declining wage growth and a contraction of the money supply are characteristics of negative growth, and economists view negative growth as a sign of a possible recession or depression.
What is the word for negative growth? ›
What is another word for negative growth?
| economic decline | economic downturn |
|---|
| downturn | bottom-out |
| credit squeeze | bankruptcy |
| slowdown | decline |
| bust | deflation |
16 more rowsNegative Growth Example
The Great Recession of 2008 was a period of negative Economic Growth lasting more than two years. In 2008, the Great Recession began and lasted until 2010. In 2008, GDP growth was -0.1% , while in 2009, it was -2.5%.
What stage is negative growth? ›
A recession can be defined as a sustained period of weak or negative growth in real GDP (output) that is accompanied by a significant rise in the unemployment rate. Many other indicators of economic activity are also weak during a recession.
Is negative growth an oxymoron? ›
A general term which refers to an increase (or decrease in the case of the oxymoron "negative growth") in a given quantity.
What is another word for growth failure? ›
Failure to thrive (FTT), also known as weight faltering or faltering growth, indicates insufficient weight gain or absence of appropriate physical growth in children.
What is a synonym for being negative? ›
On this page you'll find 108 synonyms, antonyms, and words related to negative, such as: adverse, gloomy, pessimistic, unfavorable, weak, and abrogating.
What is a negative growth factor? ›
Negative growth regulators cause cells to leave the proliferating state and enter one of several possible nonproliferating states.
What is negative vs slow growth? ›
A country with rapid growth will have a wide base and narrow top. A country with slow growth will have almost equal numbers from top to bottom. A country with negative growth will have fewer at the bottom and top, and most of the population in the middle.
What does negative growth mean in biology? ›
Negative population growth means that there are more individuals leaving the population than joining the population. For humans, leaving the population usually means either dying or emigrating away from the country.
Negative population growth, in which the population declines. This occurs when there are more deaths than births.
Can growth be positive and negative? ›
Growth rates can be positive or negative, depending on whether the size of the variable is increasing or decreasing over time.
What is two periods of negative growth? ›
A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth mean recession, but many use more complex measures to decide if the economy is in recession. Unemployment is one key feature of recessions.
What is the paradox of growing? ›
What you're experiencing is the Growth Paradox: the belief that as you scale the company — and increase your dream team, prospects, and resources — things should get easier. But they don't. Things actually get harder and more complicated.
What is one negative effect of growth? ›
There are two negative effects of economic growth: resource depletion and ecological collapse.
What is stagnancy? ›
Definitions of stagnancy. a state of inactivity (in business or art etc) synonyms: doldrums, stagnation. type of: inaction, inactiveness, inactivity. the state of being inactive.
What is it called when you stop progressing? ›
An impediment is anything that slows or blocks progress.
What is the word for restricted growth? ›
Restricted growth, sometimes known as dwarfism, is a condition characterised by unusually short height.
What do you call a person who always has something negative to say? ›
Downers are also known as Negative Nancys or Debbie Downers. They always have something bad to say.
What is the word for an extremely negative person? ›
Synonyms. pessimistic. his excessively pessimistic view of life. cynical.
On this page you'll find 13 synonyms, antonyms, and words related to negative thinking, such as: chip on one's shoulder, cynicism, defeatism, dim view, discouragement, and expectation of the worst.
What is lower growth impact? ›
Lower rates of economic growth give more chance to shift to renewable energy. Lower rates of growth will also slow down the rate of consuming non-renewable resources which may be beneficial for the very long-run. Lower inflation. With lower growth rates, there is less inflationary pressures.
What are the 4 growth factors? ›
skin cells (epidermal growth factor, EGF) nerve cells (nerve growth factor, NGF) connective tissue or mesenchymal cells (fibroblast growth factor, FGF) thrombus-forming cells that line blood vessels (platelet- derived growth factor, PDGF)
Can you have a negative growth factor? ›
Growth factors can have either positive or negative influences on these processes and their activities vary with cell type and the developmental stage of the organism.
What is the difference between positive and negative growth in biology? ›
There are two forms: Positive = the plant, or a part of it, grows in the direction from which the stimulus originates. and Negative = growth away from the stimulus.
What is meant by positive or negative growth of population? ›
If the number of deaths is more compared to the number of births, then the population shows a negative trend. If the number of births is more compared to the number of deaths, then the population shows a positive trend.
What does 2 quarters of negative growth mean? ›
How a Recession Is Defined. In many macroeconomics textbooks, a recession is defined as two consecutive quarters of negative growth in the GDP, according to Dawit Kebede, senior economist for the Credit Union National Association. That means, by the textbook definition, the U.S. is in a recession.
Why am I having a period every 2 weeks? ›
Many things can make your period come more often than usual. Natural hormone fluctuations can cause this, as can missing a birth control pill and lifestyle factors like being overweight or stressed. Having your period twice in one month could also be a sign of a medical condition that needs treatment.
How many quarters of negative growth is a depression? ›
It is generally defined as a decline in GDP for at least two consecutive quarters.
What is the greatest paradox in human nature? ›
The paradox of doing things that are totally in contradiction with our principles and beliefs is probably the most common paradox. Because it is inherent in our nature, it is almost impossible for us to change.
The Paradox Mindset is about adopting "both-and" thinking instead of constraint to the conventional "either-or” one. Think about it for a moment. Your work life is often a mix of various contradictory demands & decisions. You may think that this will cause stress & confusion.
What is Enlightenment paradox? ›
At its heart, the movement contained a paradox: Ideas of human freedom and individual rights took root in nations that held other human beings in bondage and were then in the process of exterminating native populations.
What are the 4 negative consequences of human population growth? ›
Rapid growth has led to uncontrolled urbanization, which has produced overcrowding, destitution, crime, pollution, and political turmoil. Rapid growth has outstripped increases in food production, and population pressure has led to the overuse of arable land and its destruction.
What is the biggest oxymoron? ›
The phrase "sleep like a baby" is the biggest oxymoron of all time.
What is the most famous oxymoron? ›
Some popular everyday oxymorons include:
- Almost exactly.
- Awfully good.
- Deafening silence.
- Freezer Burn.
- Living dead.
- Loyal opposition.
- Old news.
- Only choice.
Irony is a literary device that relies on the difference between expectation and outcome. An oxymoron is a figure of speech where two words of opposite meaning are used together.
What is negative growth in human geography? ›
This negative or zero natural population growth means that these countries have more deaths than births or an even number of deaths and births; this figure does not include the effects of immigration or emigration.
What does negative growth mean in human geography? ›
A decrease in birth rates and immigration rates while experiencing an increase in elderly people and emigration rates indicates the country is experiencing a negative growth rate.
Can human growth be positive and negative? ›
The growth is quantitative and value neutral which means it may have a positive or a negative that the change may be either positive (showing an increase) or negative (indicating a decrease) whereas development means a qualitative change which is always value positive.
