Page 27 - Policy_Economic_Report_September2020

Policy and Economic Report:
Oil & Gas Market

IV. W-shaped recession and economic recovery
Characterized by ‘double-dip’ recessions, “W” shaped recoveries are known for their surprises,
wherein while it would seem that the economy is undergoing a V-shaped recovery, it plunges
into a second but smaller contraction before fully recovering to pre-recession levels. In this
case, markets are expected to be even more volatile and misleading, especially for investors
and traders.

V. L-shaped recession and economic recovery
Considered the worst-case scenario, an L-shaped recession and economic recovery is when the
economy returns to growth at a much lower base than pre-recession levels. This means that it
takes much longer to fully recover. This tends to happen in economies with lackluster
investment levels, low levels of economic growth and a slow revival in employment.
VI. K Shaped Recovery

Much recently coined, a K-shaped recovery is one where the post COVID era will see some
segments of the economy do well such as technology, pharma and non-discretionary
consumer goods, while others such as real estate, tourism hotels, airlines will not fare as well.
Essentially, “K” is reflective of the performance of the stock market. It is usually characterized
VII. by a sharp decline, followed by sharply divergent pathways.
X Shaped Recovery
A new letter in the mixture that has been added lately is ‘X.’ An “X’ shaped recovery is one
where a nation is at crossroads since the crisis is resulting in a different set of economic
impacts in different parts of the world, largely because the health situation is different and

hence the extent to which the economies are able to combine saving lives and saving
livelihoods is also different.

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September 2020