V-Shaped Recovery – Key Facts

V Shaped recovery is a type of economic recovery. The name “V Shaped Recovery” is derived from the shape of the graph representing recession and revival of an economy, which resembles the alphabet V.

Key Points

  • This particular recovery involves a deep recession in economy, followed by a sharp rise back.
  • Such recoveries are resultant of an economic stimulus offered by the Government and easy money policy perused by the Central Bank.
  • The recovery in V shaped curve witnesses improved production levels and strong consumer demand.
  • V Shaped recovery is said to be one of the best-case scenarios, since an economic depression is immediately followed by quick recovery in major parameters of macroeconomic performance.
  • Best examples of V-shaped recovery are- Depression of 1920-21 and Recession of 1953.
  • In the 1953 recession of United States, the time period of recession was less and mild. It stated in the Q3 of 1953 and ended by Q4 of 1954.
  • Other types of economic recovery and recession are- U-shaped, W-shaped, L-shaped, and J-shaped.

India towards V-Shaped Recovery

As per the Ministry of Finance, India is advancing towards the V-shaped recovery after a collapse in the 1st quarter (Q1). A further improvement is expected now in Q3. However, risks of the second wave of COVID-19 are still there. As per the ministry, GDP growth of has shown a quarter-on-quarter increase of 23 per cent in the July-September quarter this year. The decrease in the GDP has narrowed by 7.5% in Q2. As per Department of Economic Affairs, consumer price inflation will decrease gradually. Agriculture sector which has grown at 3.4% in the first half of 2020-21 will continue to improve further. The ministry has credited the timely tranche of Atmanirbhar Bharat package 3.0 for this recovery.

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