Corona recession and possible economic recovery forms
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| Corona recession and possible economic recovery forms |
According to economic history, there are four forms of recovery that follow the recession phase, and the first of these forms is the form that takes the letter (V), which means that there is a rapid reversal from the bottom of the economic recession or from the lowest level of economic indicators.
As for the second figure, it is very close to the first figure, except that the rebound period takes a relatively long time, and this shape takes a letter (U), which means that recovery takes place after a period of walking in a cross direction on the level of economic indicators, as well as after a period of stability of major indicators such as Unemployment rates, economic growth, consumer, producer and other confidence indicators for a period of time are at minimum levels, which heralds the end of the worst part of the recession, which is the bottom of the economic recession.
As for the third figure, it takes the shape of the letter W (Double V), where economic and financial indicators bounce up quickly, indicating a rapid recovery from the recession. However, a large part of the expectations on which the rise was based - especially in financial markets, as it precedes the recovery of the economy in Habit - a large part of it has not been fulfilled on the ground, and then a major setback occurs again, whether at the level of economic indicators or at the level of financial markets, and this setback culminates in reaching the bottom that the indicators previously reached, from which a rebound occurs from the top once and for all.
As for the fourth and final form of economic recovery, it takes the form of the letter (L), which means that the phase of recovery may come after a very long period of time when economic indicators and financial market indicators have been stable, to the degree that it is not possible to predict the length of this period.
And before the verification of one of these four forms is weighed according to the current situation, and what caused - and still is - the Coronavirus in the global economy, it is necessary to distinguish between the concepts of recession and recession, so is there really a difference between them?
The fact of the matter is that there is a difference, a big difference, and on the basis of these teams, the shape of recovery can be expected; Recession is a major downturn in economic activity that lasts for several months; Depression, on the other hand, is more severe than a recession. Rather, it is an economic catastrophe that may extend for several years, as the real GDP decreased by more than 10%. Then, showing the strength of the recession by turning it into a recession or not, will form a potential recovery.
In view of the "economic forms of recovery" that will be determined based on two factors: The first is the situation in which matters will unfold after the end of the crisis caused by the "Coronavirus", either by limiting its spread gradually or by finding the appropriate vaccine for it. The second factor is the degree of interaction of the major and influential countries, led by the G20 countries, in finding plans and alternatives that are in line with the size of the existing challenge.
The first form of recovery (V) may be excluded for most countries of the world, in light of the coincidence of the economic effects of Corona with an economic recession that was confirmed to occur in several countries and several indicators confirmed it before the emergence of the virus. The virus came only to accelerate the entry into an economic recession in several countries, especially in the United States, and several other European countries. This means that the crisis caused by the virus was not an emergency and that recovery from it will not be quick.
The third figure (W) is difficult to predict at the present time. At least until the losses that the virus will cause are quantified, and the government measures are taken in several countries to contain its effects are followed, while at the same time addressing the recession that began to emerge with force gradually.
We still have two forms of recovery (U & L), which is expected to take the form of recovery, one of them. The recovery is in the form of a letter (U). Despite the length of time that economic indicators spend until recovery, it usually does not take many years and after that, the recovery is strong and solid.
As for the economic recovery that may come in the form of a letter (L), it will come after many unpredictable years, and often it comes after the outbreak of global wars that reshape the global political and economic landscape. This form of recovery was only achieved once when the Great Depression occurred in 1929 CE, which did not actually end until after the end of World War II in 1945 A.D., then recovery began with Marshall's economic project for the reconstruction of Europe, which he announced in the middle of 1947 AD, that is, the recession It spanned a very long period of nearly twenty years.
And please disappoint me, and the matter ends at the U-shape recovery at the latest, and we do not enter a recession that would result in the recovery in the form of the letter (L).