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Jargon Busting

Jargon Busting

HHG want to make sure all our clients understand the terms we use, and the terms they are likely to come across in the business section, and other media. Given the current environment, we thought we’d look at some of the terms you are more likely to hear in tough times.

Bear Market


A bear market beings when stock prices fall by 20% or more from recent highs amid widespread pessimism and negative investor sentiment. Typically, bear markets are associated with declines in an overall market or index like the NZX50, or ASX200. Most international markets entered Bear Market territory in March.

Quantitative Easing


Quantitative easing is a monetary policy whereby a central bank (NZ’s reserve bank, or the US’s Federal Reserve) buys predetermined amounts of government bonds or other financial assets in order to add money directly into the economy. The process is used to increase the money supply in an attempt to increase leadings (from banks), lower borrowing costs (across the economy) and increase spending (by consumers). The aim is to increase inflation, and maintain economic growth.

Recession


A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region. It has been typically recognized as two consecutive quarters of economic decline, as reflected by GDP in conjunction with monthly indicators like a rise in unemployment, although recessions do not require two consecutive quarters of economic decline to be declared. It looks increasingly likely that NZ and the global economy will fall into recession in 2020.

Depression


A depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts three or more years or leads to a decline in real gross domestic product (GDP) of at least 10 percent. The current measure being taken to combat Covid-19 are unlikely to cause a depression, although the long term impacts are difficult to measure.

 

 

Add a comment1 Comment

Reply Neil Easterbrook | April 8th, 2020 at 3:05pm
Thank you very much for the update and newsletter. It always good to hear what the professionals are thinking. Very much appreciated.

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