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Beth Ann Debouvre: The Speed of Economic Recovery After the COVID-19 Pandemic

Beth Ann Debouvre: The Speed of Economic Recovery After the COVID-19 Pandemic

The pandemic outbreak has affected economic growth and development worldwide. Office shutdowns and job losses have resulted in an economic downturn. As days and weeks pass by, economists and other market experts are anticipating an eventual economic recovery. However, the question remains as to how soon one can expect the economy to recover completely.

Beth Ann Debouvre highlights different recovery phases

There are several means through which the economy may recover. As shared by Beth Ann Debouvrehere are some types of possible methods of economic recovery:

  • L-shape

This method represents a sharp fall in economic growth, followed by a minimal and slow recovery phase. In the L-shape model, there are traces of unemployment. It will take years to achieve complete recovery.

  • U-shape

This method displays how the economy will decline and become stagnant for some time. After that, it will rise and move back to its peak again.

  • W-shape

This method presents a recovery after dipping into an acute decline. There is complete recovery after the fall. It is also known as a “double-dip recession,” which is what occurred in the 1980s.

  • V-shape

Here, the economy’s acute decline is followed by a fast recovery, reaching its past peak within a year. This phase is characterized by both customer spending and economic measures.

Today, economists and marketers are trying to determine which shape will apply to this recession that we face during the COVID-19 pandemic.

How can the economy recover?

Multiple CEOs were surveyed worldwide to get an understanding of which recovery shape will apply to the current pandemic and the associated recession. Most CEOs felt that the economic recovery would likely follow a U-shaped recovery phase, where there will be a sluggish recovery followed by a steady rise. The majority of European CEOs (55%) think there will be a U-shaped recovery. Current pandemic hotspots include the likes of Brazil, India, and the U.S. In Japan and the U.S, close to 23% of CEOs anticipate that there might be a second wave. This suggests that the economic recovery will follow a W-shape. By now, both countries have experienced increased pandemic cases and have good reason to believe that a comeback, or a second/third wave, likely may occur.

Risk analyst view on economic recovery

The opinions of CEOs are all based on the probability of which type of economic recovery will take place. These answers largely depend on cultural biases, geography, and the state of the pandemic outbreak in their respective regions. All in all, it is safe to assume that a rather drawn-out, extended recovery is probable. The World Economic Forum surveyed risk analysts on their perspectives on economic recovery and they shared similar views. Most believe there will be a phase of prolonged recession and stagnancy before things start to turn around for the better. Still, most governments are pursuing measures to flatten the curve as much as possible. We are yet to witness any actual long-term recovery, so all of these predictions are based on the knowledge we have now. Only time will tell how recovery happens after this pandemic subsides. 

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