International Monetary Fund considers the Corona-induced recession comparable to the Great Depression of the 1930s. It even finds the forecast of a 5.8 percent growth for next year as a slight improvement.
This article is written by Sirous Tosh on November 1, 2020, and is available to the public for free.
Commentators have recently added a new form of economic recovery diagrams, formerly known by “V", "U", "W”, “L" and "I", to the alphabetic culture of economic recovery routes. The "K" diagram, which reflects stock market performance and shows a sharp decline following clear divergence paths, actually manifests the important dynamics created by the global divide. The truth is that the concentration of wealth in one sector leads to the unequal distribution of income. Given the historical background, the wealthy and affluent class of societies have the power to "influence the purchasing power", "determine the public discourse", and "shape and guide the political direction" in different communities.
Reducing restrictions and cessation of economic activities can initially increase the level of production. However, enterprises' effects of unemployment and bankruptcy may act as a speed bump for the production-level upgrade. As a result, two downward trends must be gone through to return the economy to its previous trend. This is also possible if another wave of Corona occurs. If the downtime continues this year, the likelihood will increase, and the economy will exit from the current recession in a W-shaped direction.
The economy moves in a U-shaped path.
The economy will follow a U-shaped path if economic recovery lasts for more than two seasons. Since the global economic losses have been faster and more profound than in the 2008-2009 financial crisis, such a trend is more likely to lead to economic recovery. Accordingly, the effect of the cessation of economic activities will continue for some time after their reopening because the reopening of economic activities will gradually take place, social distancing will continue, and the tourism industry will continue to be affected by the Coronavirus.