A prolonged period of slow economic growth, which is also accompanied by high unemployment rates. In general, it characterizes a state of lack or very low level of activity, growth, or development. It is also defined as a protracted period during which an economy experiences low growth and high unemployment.

An economy in stagnation features a real economic growth that does not exceed 2% on an annual basis. Indicators of stagnation include a decrease in gross domestic output (GDP), an increase in unemployment, falling wages, lower creation of new jobs, etc.

Weaker economies usually fall into a state of economic stagnation when it experiences a prolonged sluggish growth (for periods as long as 10 or 20 years), or on emergence from a hard-hitting financial crisis, and so on.