Economic recovery

An economic recovery is the phase of the business cycle following a recession. The overall business outlook for an industry looks optimistic during the economic recovery phase. During the recovery period, the economy goes through a process of economic adaptation and change to new circumstances, including the reasons that caused the recession in the first place, as well as the new policies and regulations enacted by governments and central banks in reaction to the recession. When displaced workers find new employment and failing enterprises are bought up or broken up by others, the labor, capital goods, and other economic resources that were tied up in businesses that failed and went under after the recession are re-employed in new industries. Recovery is the process by which the economy heals itself from the harm it has sustained, paving the way for future growth. "Terms such as 'recovery', 'reconstruction', and 'rebuilding' might suggest a return to the status quo before the conflict. Typically, however, developmental pathologies such as extreme inequality, poverty, corruption, exclusion, institutional decay, poor policy design and economic mismanagement will have contributed to armed conflicts in the first instance and will have been further exacerbated during conflict. Accordingly, post-conflict recovery is often not about restoring pre-war economic or institutional arrangements; rather, it is about creating a new political economy dispensation. It is not about simply building back, but about building back differently and better. As such, economic recovery . . . is essentially transformative, requiring a mix of far-reaching economic, institutional, legal and policy reforms that allow war-torn countries to re-establish the foundations for self-sustaining development." Leading indicators include the stock index, which often increases ahead of an economic recovery. This is generally because stock markets are guided by potential hopes. Other important indicators are unemployment rate and employment-population ratio (EPR).