K-Shaped Recovery

K-Shaped Recovery

Syllabus: GS-III

Subject: Indian Economy

Topic: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Why in the news?

SBI’s Economic Research Department published a report debunking notions of a K-shaped post-pandemic recovery.

What is economic recovery?

Economic recovery refers to the phase of the business cycle following a recession where the overall economic activity begins to improve and move towards expansion.

Key characteristics of an economic recovery:

  • Increased Gross Domestic Product (GDP)
  • Rising incomes and consumption
  • Decreasing unemployment
  • Stabilized financial markets

There are different ways to categorize economic recoveries, but one common way is by their shape on a graph.

               Types of economic recovery

K-shaped recovery

A K-shaped recovery refers to a scenario where different segments of an economy recover at different speeds, following a slowdown or recession.

The term prominence in 2020 and 2021 in the wake economic slowdown accompanied with the COVID-19 pandemic all over the world.

The letter “K”, with one arm going up and the other going down is the visual representation of this phenomenon.

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