Economies do recover after a slump, but not all recoveries are equal. Some rise, some fall — at the same time. So, let's understand K-shaped recovery.
A K-shaped recovery is when different parts of the economy recover at uneven speeds after a recession. While some sectors or income groups bounce back fast, others continue to decline.
The letter K shows two diverging lines: one going up, symbolising those who recover quickly, and one going down, showing those who continue to struggle
Usually, tech companies, wealthier households, stock market investors, white-collar jobs recover faster due to better resources and remote work access.
Small businesses, low-income workers, informal sector, and travel, hospitality, and retail industries face prolonged distress, job loss, and slower recovery.
After Covid-19 pandemic, big tech firms surged in profits, but millions of low-wage workers lost jobs or income permanently.
A K-shaped recovery increases inequality, both economic and social. The gap between the rich and poor widens dramatically.
A K-shaped recovery shows a split in economic outcomes. Some rise stronger, while others fall behind. Understanding it is key to shaping inclusive policies.
Economists suggest deliberate action and inclusive policies for a balanced recovery, which may include targeted relief for vulnerable sectors, investment in skills and education, support for small businesses, and progressive taxation.