Economic stagnation is when an economy experiences a sustained period of little to no growth. The consensus among economists is that anything below 2% annual growth constitutes stagnation. Furthermore, what characterizes stagnation is low economic output, high unemployment, and an increase in part-time employment. Some periods of stagnation are short-term, while others form part of a broader economic condition. Also, stagnation can occur within specific industries.

When an economy stagnates, wages don’t rise, and stock markets tend to suffer. Stagnation can happen to any economy, regardless of how advanced it is. There are several causes of stagnation. Often, economic shock plays a key role. When economies suffer as a result of war, natural disasters, or supply chain shortages, economic output tends to stagnate.