K-Shaped Recovery
About
A K-shaped recovery divides the economy into two, with divisions based on wealth, geographic, and industrial characteristics
It is called K-shaped recovery because at its most basic, one portion of the economy is bouncing back and increasing in value, and others continue to suffer the effects of the recession
A K-shape recovery happens when different sectors recover at different rates (COVID Pandemic)
- When one sector rebounds from recession and another sector continue to decline
- K-recovery is possible when the creative destruction of old industries due to the development of new industries and technologies during the recession
- Government strategies like monetary and fiscal policies used to combat the recession can lead to a K-shaped recovery
Other shaped recoveries
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L-shaped |
An enormous recession which takes one year to recover |
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U-shaped |
A sharp decline followed by a time when economy sitting at a low point, before finally recovering |
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W-shaped (double dip) |
When economy hits rock bottom followed by a temporary increase and finishing with another decline |
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V-shaped |
When there is a sharp decline followed by a quick recovery |
