The deadly pandemic has brought too many deaths but also completly destructed the global supply chain. To fight the COVID-19, most of the nation around the world called for partial to complete lockdown.
Which has probably helped us fight COVID-19 but also hit hard on the demand and supply balance.
Economic experts & think tanks were speculating the overall impact on the economy once lockdown starts easing up. Different approaches put up different predictions
The “L” shape growth
“L” shape economic curve states the sudden fall in economic growth which keeps on staying low for a longer period of time. The classic example of such growth is occurred in Japan following the bursting of the Japanese asset price bubble in 1990.
The “U” shape growth
Many experts suggest that post unlock (easing up the lockdown), the economy will take a little lesser time then “L” shape curve to bounce back. This may take 2–3 quarters or more.
A classic example of “U” shape recovery are1973–75 Nixon recession and the 1990–91 recession following the S&L crisis.
The “V” shape growth
“V” shape is most loved type of economic bounce back. In this case, economy growth goes down and but bounces back very quickly.
In Recession of 1953 in the United States. In the early 1950s the economy in the United States was booming, but Fed raised interest rates, taking the economy into recession. In the 3rd quarter, ecnomy contracted by by 2.4% but by 4th quarter of 1954 economy grew by over 6%
The “K” shape growth
“K” shape is relatively a newer term. Lockdown has hit every business differently. Where major IT & Service sectors surviced but industries like auto, luxury, hospitality, travel crumbled and still managing to survive.
Once unlock (easing out lockdown) started, expectations of having a “V” or even “U” shape recovery went into vein
While there’s a visible comeback in industries like retail, technology and IT but industries like travel, hospitality, entertainment, food and etc continued to show declining trends
This is what experts term as “K” Shape recovery. Where one section of industries is showing an upward growth and other section is showing declining trends
How will it impact in longer term?
Thats the bigger question. If this type of growth is continues then soon we will have a huge parity between them. Only a few industries can’t provide jobs to all, so massive unemployment, super low wages and more importantly, over all growth of economy will impacted
What do we do now?
Govt needs to pitch in and formulate the way out for these industries to pick up the pace again. Otherwise their over all impact will be disastrous in longer term