As an economy, we have plunged into a sharp recession with most businesses impacted heavily by the lockdowns and the fatalities due to the virus. There are no customers and buyers out there and very little enthusiasm for the celebration. As the virus goes killing un abated economists are wondering what will be this corona induced recession be like. Many theories and models are being propagated where most economists say that the more mature economies will face a U Shape recession. This means there will be a sharp decline in economic activity and GDP will shrink, the situation will persist for 12 to 24 months before it climbs back gradually to its position pre-COVID -19.
A V-shaped recession where there is a steep decline and an equally steep and quick recovery is out of the question considering the world is still under lockdown and the virus threat is increasing in other counties, each seeing their mown separate peeks. In a V-shaped recession, recovery happens within 2 to four quarters which is unlikely as this is a deeper recession.
There are those experts who point to a W shaped recession it a double-dip. The thing here is that the economy will see a partial recovery and then again plunge into a recession which will remain till it finally recovers and comes back to its new normal. This will create a double-dip of sorts in the shape of a W and that is a likely scenario here economies will crawl back to recovery rather than bounce back and the bottom will be longer and two times.
An L shaped recession is the worst it is a sudden and sharp fall of economic activity which will persist and there will be no recovery once the bottom is reached it will remain so and depression will persist with no bounce back.
Job losses of temporary Staff and salary cuts for employees along with work from home has been away the companies are navigating this tricky economic period. But with on customers and no one ready to spend or venture outdoors, the cost of running a business or just keeping an establishment open will be difficult. The business will have to shut down, some will lose power like the Cinema Hall chain as their clout is much reduced, with producers streaming live through OTT platforms surprisingly Net Flicks had had a V-shaped recovery and has added millions of subscribers.
Home delivery is being encouraged and people are ordering everything online which means that consumer behavior is being influenced by this event. The brick and mortar stores will find it harder to survive in the post COVID scenario as people will be wary to shop outdoors.
But till then just for fun understand what the economic jargons mean.