5 predictions on post- recovery after COVID-19 pandemic
Publishing date:- 20 April
Image credits- canva.com
When the effects of COVID-19 will end,then how will the world economy recover.
There can be different possiblities or differrent paths by which world economy will recover.
So, let's discuss:-
At first, there is a complex relationship between:-
• The path of the virus, whether this disease will continue or its effect will reduce.
• The effectiveness of virus contaminated and economic support policies.
• The behaviour of private sectors.
Here are the 5 scenarios:-
● V- SHAPE ●
In this, the economy suddenly drops due to the pandemic but again starts to peak up very steeply as the effect of virus gradually deceases.
But, for this type of fast recovery, some aspects must be fulfilled :-
1.) The virus clears up in April or May, allowing social distancing rules to be relaxed.
2.) Whether the consumer demand will grow or not.
These demands are aided by the massive fiscal and monetary stimulus.
3.) Whether the factories and services will reopen smoothly for businesses.
4.) Government efforts to stop companies from firing workers prove successful and unemployment recedes.
EXAMPLE:- China's manufacturing PMI
Due to the pandemic, China's manufacturing production declined steeply but again accelerated fastly as the country recovered from the virus.
● U- SHAPE ●
In this case, first GDP will shrink fastly ( which is happening in reality) then for some time , GDP will grow by almost no value .
At this stage, virus cases will be on peak and then, there will be a sudden and steep recovery as policy makers help bridge gap, vaccines appear on horizon and economic activity resumes.
(Most of the experts has favoured a 'U' shaped recovery.)
Conditions for this:-
1.) The Virus lingers to June and social distancing rules takes time.
2.) While there is a release of demand, but consumers don't race back to shops or restaurants.
3.) That's because factories and other workplaces take time to return to full capacity and not every job lost in the crisis is won back . Some need to repay debts they built up during the crisis.
4.) The recovery eventually materializes, but not until late 2020 or beyond.
● L- SHAPE ●
Image credits-google photos
This type of scenario would be really the worst-case scenario for world GDP.
Conditions :-
1.) The virus runs into the second half of the year, forcing so distancing rules to remain beyond June.
2.) There is still a chance the recession will be lengthier than anticipated.
3.) In this scenario, people continue to cut back on serious spending opting to keep with their home theatres and resist taking holidays.
4.) Debts built up before or during the crisis become hard to pay down, setting off a spiral of default and business bankruptcy that create fears of a credit crunch.
5.) Govt. have to spark the demand among consumers by delivering more stimulus after their previous efforts failed.
● W- SHAPE ●
This scenario is the virus return scenario.
In economic terms, this would lead to a double- dip recession.
Points:-
1.) The virus return.
Image credits-google photos
2.) It efforts to control the pandemic are losssing ptematurely, the virus stage a comeback.
3.) That would mean the re- imposing of restrictions, reigniting uncertainity and forcing the closing of workplaces and service providers again.
4.) The result is a recovery followed by a lurch back into recession.
● TICK- SHAPE ●
Image credits-google photos
In this scenario, economy will accelerate very slowly. There will be no sudden increases in economic activities and hustle around the world.
Points:-
1.) Also known as the "Nike swoosh"
2.) This scenario allows for business and spending to slowly resume as limits are eased more carefully than they were introduced.
3.) The level of economic output stay beneath the level of its pre-crisis trend well into 2021.
4.) There's a lack of animal spirits as people remain cautious of over- spending or taking long- distance trips, especially if they have to deal with debts.
☆ These were the possible 5 ways of economic recovery post coronavirus pandemic.
Thank you
Jai Hind 🙏🙏🙏
When the effects of COVID-19 will end,then how will the world economy recover.
There can be different possiblities or differrent paths by which world economy will recover.
So, let's discuss:-
At first, there is a complex relationship between:-
• The path of the virus, whether this disease will continue or its effect will reduce.
• The effectiveness of virus contaminated and economic support policies.
• The behaviour of private sectors.
Here are the 5 scenarios:-
● V- SHAPE ●
In this, the economy suddenly drops due to the pandemic but again starts to peak up very steeply as the effect of virus gradually deceases.
But, for this type of fast recovery, some aspects must be fulfilled :-
1.) The virus clears up in April or May, allowing social distancing rules to be relaxed.
2.) Whether the consumer demand will grow or not.
These demands are aided by the massive fiscal and monetary stimulus.
3.) Whether the factories and services will reopen smoothly for businesses.
4.) Government efforts to stop companies from firing workers prove successful and unemployment recedes.
EXAMPLE:- China's manufacturing PMI
Due to the pandemic, China's manufacturing production declined steeply but again accelerated fastly as the country recovered from the virus.
● U- SHAPE ●
In this case, first GDP will shrink fastly ( which is happening in reality) then for some time , GDP will grow by almost no value .
At this stage, virus cases will be on peak and then, there will be a sudden and steep recovery as policy makers help bridge gap, vaccines appear on horizon and economic activity resumes.
(Most of the experts has favoured a 'U' shaped recovery.)
Conditions for this:-
1.) The Virus lingers to June and social distancing rules takes time.
2.) While there is a release of demand, but consumers don't race back to shops or restaurants.
3.) That's because factories and other workplaces take time to return to full capacity and not every job lost in the crisis is won back . Some need to repay debts they built up during the crisis.
4.) The recovery eventually materializes, but not until late 2020 or beyond.
● L- SHAPE ●
Image credits-google photos
This type of scenario would be really the worst-case scenario for world GDP.
Conditions :-
1.) The virus runs into the second half of the year, forcing so distancing rules to remain beyond June.
2.) There is still a chance the recession will be lengthier than anticipated.
3.) In this scenario, people continue to cut back on serious spending opting to keep with their home theatres and resist taking holidays.
4.) Debts built up before or during the crisis become hard to pay down, setting off a spiral of default and business bankruptcy that create fears of a credit crunch.
5.) Govt. have to spark the demand among consumers by delivering more stimulus after their previous efforts failed.
● W- SHAPE ●
This scenario is the virus return scenario.
In economic terms, this would lead to a double- dip recession.
Points:-
1.) The virus return.
2.) It efforts to control the pandemic are losssing ptematurely, the virus stage a comeback.
3.) That would mean the re- imposing of restrictions, reigniting uncertainity and forcing the closing of workplaces and service providers again.
4.) The result is a recovery followed by a lurch back into recession.
● TICK- SHAPE ●
In this scenario, economy will accelerate very slowly. There will be no sudden increases in economic activities and hustle around the world.
Points:-
1.) Also known as the "Nike swoosh"
2.) This scenario allows for business and spending to slowly resume as limits are eased more carefully than they were introduced.
3.) The level of economic output stay beneath the level of its pre-crisis trend well into 2021.
4.) There's a lack of animal spirits as people remain cautious of over- spending or taking long- distance trips, especially if they have to deal with debts.
☆ These were the possible 5 ways of economic recovery post coronavirus pandemic.
Thank you
Jai Hind 🙏🙏🙏
Comments
Post a Comment