Interestingly for the layman, the recent economic crisis brought many financial and economic concepts into common-speak, observes Swapnil Pawar in ‘Anatomy of Froth’ (www.leadstartcorp.com). As governments scurried to contain the fallouts of the crisis, optimists started predicting how the recovery would take place, and in this regard emerged many tail-end letters in an alphabet soup of sorts, one learns.
For instance, the ‘U-shaped recovery’ that could have stumped you from many news and analysis bulletins is all about how the GDP and economic activity, having fallen during the crisis, are expected to stay subdued for a considerable period (the flat bottom of the U) and then pick up rapidly, as the author explains.
We may be in for a ‘V-shaped recovery,’ say some experts. That is, once the fears subside, the slowdown will not only stop but also change into rapid growth, Pawar notes. There are still others who agree with the V camp for now but warn of another dip in GDP soon in future, he adds.
“The purported reason for this dip is the nature of the recovery. Since government-driven stimulus is behind this recovery and it cannot continue forever, the usual engines of investment and private consumption need to pick up steam before government spending runs out.”
Stating, therefore, that by its very nature the recovery is likely to be fraught with downside risk, the author wraps up with the line, “Hence the second V and in total, a W!”
Useful read to double-dip into.
**
BookPeek.blogspot.com
