Contraction

In business and economic contexts, contraction refers to a decline in economic activity, revenue, or business operations over a period. It’s often marked by decreased sales, layoffs, reduced production, and lower consumer spending.

Causes:

• Economic downturns or recessions.

• Industry disruptions.

• Regulatory changes.

• Market saturation.

Impact on Business:

• Lower cash inflows and tighter liquidity.

• Cost-cutting initiatives, including downsizing.

• Adjusted growth forecasts and strategic pivots.