Benjamin Gordon Cambridge Capital the continuous spread of the pandemic is threatening. It has shaken the global economy while demonstrating its negative impact on countries’ political and economic status. The ban on international travel and production is also negatively adding up. Supply and demand have witnessed significant shocks, and financial markets are under a tremendous burden. The impact of the pandemic is clearly visible in American and European countries. The world was already having a tough enough time with the economy ever since World War II and now this tragedy is only adding to it.

A considerable shakeup has to occur in the global system to help it get back on its feet. Meanwhile, international organizations have predicted that the global economy will shrink by 3% in 2020. The US economy can go down 5.9% and Eurozone 7.5% in the current year. However, for the next year, they hope that it will touch 5.8% of growth. The question is, how will it improve or what can be possible recovery models for it? According to Benjamin Gordon Cambridge Capital, four likely scenarios can push towards growth. Let’s explore.

The four paths to economic recovery as discussed byBenjamin Gordon Cambridge Capital

V-shape

This indicates the return of economic normalcy as soon as the restrictions are removed. You cannot be sure about this model due to certain factors. For example, fear of infection, limited travel permission, reduced workforce, and safety measures can be challenging. Still, experts believe this can be the best scenario if possible.

U-shape

This indicates delayed recovery. However, going by the current situation, it also seems to be the most likely model. After confinement ends, you can expect gradual progress in different areas. However, it won’t be the same as pre-COVID days.

W-shape

Also referred to as double-dip, this recovery model means that there can be another downfall after a bit of recovery, but then, again, the economy can revive. It is also possible if you think of the infusion and withdrawal of monetary and fiscal packages introduced to fight the impact of COVID-19.

L-shape

Experts believe that this is one of the worst scenarios the world economy can face. L-shape hints at a great economic depression that may take a prolonged amount of time to get better. This is the weakest form of economic recovery, which requires considerable financial and social shakeups. Emerging countries can suffer the most under this, as they depend on commodity exports more than the stimulus packages.

As such, if you speak to anyone, you will realize that recovery and normalcy have a relative significance. You cannot expect to return to pre-coronavirus days without a vaccine or immunity. The ease of restrictions will likely lead to gradual economic progress. However, one will need to ensure proper hygiene and safety standards while maintaining social distance. A lot of businesses can find this challenging as they are forced to reduce their capacity. For example, restaurants, bars, schools, museums, concert halls, etc. 

For the moment, we need to focus on preventive measures and lasting economic developments.