U, V and W Recovery

Subject: Economy

Context:

Analysts suggested that India’s economic recovery from COVID pandemic is more likely to be a ‘U’ or ‘W’ shaped rather than ‘V’.

Concept:

• Economic recession and recovery are often charted in the most common shapes such as U, V and W.
• A U-Shaped Recovery represents the shape of the chart of certain economic measures, such as employment, GDP and industrial output. It is also charted when the economy experiences a gradual decline in these metrics followed by a gradual rise back to its previous peak.
• A V-shaped recovery is characterized by a sharp economic decline followed by a quick and sustained recovery. This type of recession tends to be considered a best-case scenario.
• W-shaped recessions begin like V-shaped recessions but turn down again after false signs of recovery are exhibited. It is also known as double-dip recessions, because the economy drops twice prior to full recovery.