Context:
Nomura economists have noted that household stress in India has now become K-shaped with the increase in retail debt due to consumption borrowing.
K-shaped Recovery
- An economic situation where a part of the economy recovers at a different rate, time, speed, or magnitude from other regions.
- This restructuring of the economy or society is characterized by deep changes in economic outcomes and relations before and after the recession.
- Causes
- Existing inequalities or a recession that affected populations and groups differently.
- An industry and related technologies develop to destroy creative, old industries in the recessionary phase.
- Monetary and fiscal policies of governments to combat the recession can indeed cause K-type recovery.
- Recessions can have this peculiar effect upon different parts of the economy with negative real shocks.
- Instance
- In the K-shaped recovery that North America witnessed during the COVID-19 pandemic, richer individuals and industries recovered more rapidly than poorer ones.
