Where do we fit in the economic cycle?

Where do we fit in the economic cycle?


There are four (4) economic cycles namely Boom, Slowdown, Recession and Recovery.  Countries will undergo one of these cycles from time to time. However, not all countries necessarily have to experience the same economic cycle simultaneously. Of course there are some countries such as the Turks and Caicos whose economy is linked directly to the performance of the USA economy. Therefore, if the USA experiences recession, more than likely the Turks and Caicos will also experience recession. TCI depends heavily on the USA market for tourism so if there is a recession in the USA, tourists will not be able to take a vacation to a high-end destination like the Turks and Caicos. On the other hand, if there is a boom, tourists will be in a position to travel to TCI.

This article will describe the four economic cycles and based on the description of the various economic cycle, you can make your own conclusion as to what economic cycle we are in. One of the primary determinants for an economy cycle is the performance of the Gross Domestic Product (GDP).  GDP is the value of goods and services produced by a country during a specific period of time. Other determinants will be employment level, interest rate and the level of consumer spending.


During the Boom stage, countries will experience an increase in the GDP that is growing faster than normal trends. It is during this stage, where consumption of goods and services will increase as people will be spending and demanding more goods and services. As a result of this, the public and private sector will be able to hire more people and will be in a great position to increase the salaries for employees. If more people are hired, consumers will have money and they can consume the goods and services they desired. The demand for goods and services will see an increase in revenues for the private and public sector. It will also provide opportunities for individuals to create new business or expand existing businesses.


During the slowdown stage, countries will experience a level of growth but the rate of the growth of GDP has slowed down. For instance, if countries were experiencing a GDP growth of say 2.5% in past but they are now they are experiencing a GDP growth of say 1% then we can say countries are experiencing a slowdown because the growth rate moved from 2.5% to 1%. During the cycle, countries will still experience economic activities as described in the Boom stage but it will not be at the same level as Boom and therefore some countries will experience some unemployment.


During the recession stage, countries will experience negative growth. Recession is normally measured when there is a fall in GDP for two consecutive quarters. It is during this stage that there is a reduction in the demand for goods and services, revenues for the public and private sector decline significantly, there is a high level of unemployment as companies will be forced to lay off employees and cannot afford to recruit staff. As a result, the disposable income will be reduced and people will not be in a position to spend more money on goods and services.


During the recovery stage, countries will experience a positive improvement in GDP after the recession stage. It is during this stage that the confidence level of consumers and businesses will begin to increase and there will be some level of positive economic activity.


Based on the aforementioned economic cycles, I believe we can conclude that the Turks and Caicos Islands is currently experiencing recession. The symptoms of recession in TCI is evident due to the following factors;

  • The Government and the Private Sector has lost millions of dollars in revenue.
  • Significant cancellation in reservations at the resorts,
  • Companies laid off employees in massive droves forcing unemployment to be at an all-time high
  • Disposal income has reduced significantly and as a result the demand for goods and services has decreased significantly and consumers are unable to pay their bills.

Despite the country being in a recession stage, let us remain optimistic for a recovery to take place soon.


Share this post

Pin It on Pinterest

Share This

Share This

Share this post with your friends!