{"id":9688,"date":"2020-09-10T23:06:16","date_gmt":"2020-09-10T17:36:16","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=9688"},"modified":"2020-09-10T23:06:16","modified_gmt":"2020-09-10T17:36:16","slug":"k-shaped-recovery","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/k-shaped-recovery\/","title":{"rendered":"K-shaped Recovery"},"content":{"rendered":"<p><span style=\"color: #0000ff;\"><strong>Relevance: Prelims: Indian Economy<\/strong><\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/i0.wp.com\/www.corona-stocks.com\/wp-content\/uploads\/2020\/09\/k-shaped-recovery.png?fit=661%2C436&amp;ssl=1\" alt=\"We Might Be In a K-Shaped Recovery for a While - CORONA stocks\" \/><\/p>\n<ul>\n<li>The term \u2018<strong>K-shaped recovery\u2019<\/strong>\u00a0is used to describe what has been happening in varying degrees since the financial crisis of 2008: The growing gap between winners and losers among countries, economic sectors, companies, and, of course, people.<\/li>\n<li>For example: Industries like technology, retail, and software services have recovered from the industry and begun re-hiring, while the travel, entertainment, hospitality, and food services industries have continued to decline past March levels.<\/li>\n<\/ul>\n<p><strong>Other Major Types of Economic Recoveries<\/strong><\/p>\n<p><span style=\"color: #ff0000;\"><strong>Z-shaped\u00a0Recovery\u00a0<\/strong><\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.drishtiias.com\/images\/uploads\/1591609286_image7.png\" alt=\"Shapes of Economic Recovery\" \/><\/p>\n<ul>\n<li>If the economic disruption was just for a small period wherein\u00a0<strong>more than people\u2019s incomes, it was their ability to spend that was restricted<\/strong>, it is possible to imagine a\u00a0<strong>\u201cZ\u201d-shaped<\/strong>\u00a0recovery.<\/li>\n<\/ul>\n<ul>\n<li><strong>In this, the GDP<\/strong>\u00a0\u2014 and here we are talking about absolute GDP, not GDP\u2019s growth rate \u2014 actually\u00a0<strong>overshoots the trend path<\/strong>\u00a0because of the pent-up demand.<\/li>\n<\/ul>\n<ul>\n<li>Imagine, deferred parties, salon visits, movies, purchase of new cars, houses and appliances etc. \u2014 all of them get bunched up together.<\/li>\n<\/ul>\n<p><strong><span style=\"color: #ff0000;\">V-shaped Recovery<\/span>\u00a0<\/strong><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/thumbor.forbes.com\/thumbor\/711x711\/https:\/\/specials-images.forbesimg.com\/imageserve\/5ed7ff700a0c710007d47468\/960x0.jpg?fit=scale\" alt=\"U-Shape? V-Shape? Recovery Shapes Explained And What They Mean For  America's Economy\" \/><\/p>\n<ul>\n<li>But what if the economic disruption lasts longer resulting in several activities being forgone instead of being deferred?<\/li>\n<\/ul>\n<ul>\n<li>For instance, even the monthly haircut \u2014 when you go to the salon after 3 months, you have already lost 2 haircuts-worth of economic activity forever!<\/li>\n<\/ul>\n<ul>\n<li>In such a scenario, and\u00a0<strong>assuming incomes and jobs are not permanently lost,<\/strong>\u00a0the economic growth recovers sharply and returns to the path it was following before the disruption. This is called a\u00a0<strong>\u201cV\u201d-shaped<\/strong>\u00a0recovery.<\/li>\n<\/ul>\n<p><span style=\"color: #ff0000;\"><strong>U-shaped Recovery\u00a0<\/strong><\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.pimco.com\/-\/media\/blog\/images\/2020\/04\/pimco_blog_fels_apr2020_fig1.ashx?la=en-us&amp;vs=1&amp;d=20200417194506&amp;hash=4217C55E8C6E0A2A92B9B65A332735EA40FD404E\" alt=\"Key Takeaways From PIMCO's Cyclical Outlook: From Hurting to Healing | PIMCO\" \/><\/p>\n<ul>\n<li>But what will happen if this recovery is slower and takes more time because the\u00a0<strong>economic disruption resulted in several jobs being lost and people losing incomes,<\/strong>\u00a0<strong>drawing down on their savings etc<\/strong>.?<\/li>\n<\/ul>\n<ul>\n<li>Then the economy will follow a\u00a0<strong>\u201cU\u201d-shaped<\/strong>\u00a0path. In such a scenario, after the initial fall, the recovery is gradual before regaining its momentum.<\/li>\n<\/ul>\n<p><span style=\"color: #ff0000;\"><strong>W-shaped Recovery\u00a0<\/strong><\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/flemingwatson.com\/wp-content\/uploads\/2020\/04\/What-The-Heck-is-a-V-Shaped-Recovery-W.jpg\" alt=\"What the Heck is a V Shaped Recovery? | Fleming Watson\" \/><\/p>\n<ul>\n<li>Since we are talking about a Covid-induced disruption, it makes sense to also look at a\u00a0<strong>\u201cW\u201d-shaped<\/strong>\u00a0recovery as well.<\/li>\n<li>This shape allows for the possibility of a V-shaped recovery, which is pegged back by a second wave of infections until of course, the economy recovers for the second time.<\/li>\n<\/ul>\n<p><span style=\"color: #ff0000;\"><strong>L-shaped Recovery\u00a0<\/strong><\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/proxy\/lQ17-AxKsKehI6rJkaFgVGLWLwtoguWclK1R_hX2RwE-g8Bj87StHGkkStiUSZM1NzhZlaIHg45mGAW39PGSkiKTg-g9hjiJ8Z11krNM-9sikULqEsrX_AKb_AOxjIcW1L06wdBOnKiUxgUHe9S0S-OpvQ\" alt=\"Rostra Economica \u2013 Post-pandemic Recovery: The Shape of our Actions\" \/><\/p>\n<ul>\n<li>The last scenario is\u00a0<strong>the one policy-makers most dread<\/strong>. It is called the\u00a0<strong>\u201cL\u201d-shape\u00a0<\/strong>recovery.<\/li>\n<li>Here, simply put,\u00a0<strong>the economy fails to regain the level of GDP even after years go by.<\/strong><\/li>\n<li>As the shape shows,\u00a0<strong>there is a permanent loss to the economy\u2019s ability to produce.<\/strong><\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/miro.medium.com\/max\/1090\/1*S4JRJGjepdUjHIEWLLRYaA.jpeg\" alt=\"The Case for Rebound Optimism. Strong economic fundamentals could lead\u2026 |  by Art Kleiner | Medium\" \/><\/p>\n<p><span style=\"color: #0000ff;\"><strong>For more such notes, Articles, News &amp; Views Join our Telegram Channel.<\/strong><\/span><\/p>\n<p><a title=\"Telegram Link\" href=\"https:\/\/t.me\/triumphias\" target=\"_blank\"><span style=\"color: #ff0000;\"><strong>https:\/\/t.me\/triumphias<\/strong><\/span><\/a><\/p>\n<p><span style=\"color: #0000ff;\"><strong>Click the link below to see the details about the UPSC \u2013Civils courses offered by Triumph IAS.<\/strong> <\/span><span style=\"color: #ff0000;\"><strong><a style=\"color: #ff0000;\" title=\"Courses available\" href=\"https:\/\/triumphias.com\/pages-all-courses.php\">https:\/\/triumphias.com\/pages-all-courses.php<\/a><\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: Prelims: Indian Economy The term \u2018K-shaped recovery\u2019\u00a0is used to describe what has been happening in varying degrees since the<\/p>\n","protected":false},"author":1,"featured_media":6714,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[123,42,43],"tags":[392],"class_list":["post-9688","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/9688","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=9688"}],"version-history":[{"count":1,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/9688\/revisions"}],"predecessor-version":[{"id":9689,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/9688\/revisions\/9689"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/6714"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=9688"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=9688"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=9688"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}