Sunday, December 7, 2008

What shape the world will be in: An Interesting observation

An interesting observation by a corporate economist on the path that recession is expected to take- Growth would dip followed by recovery, the after effects of the recent monetary easing, implying a familiar ‘U’ shape.
However other anticipated patterns resemble other letters of the alphabet- Optimists apprehend the recovery path to look like ‘V’ implying a quick return of confidence and credit; on the other hand it could be a ‘W’ shaped double dip. Pessimists fear the pattern of the future to resemble an ‘L’, implying a big dip and then a ride along the bottom. A gloomy frame of mind would rather think of a back slash: ‘\’ , displaying a relentless decline. Other options could be a downward spiral, shaped like ‘S’ or ‘Z’.
The bottom line is that the next year is different from an up-down business pattern which we saw in the last three decade, and that the range of alternative options as provided by alphabet economics shape the range of policy prescriptions that the policy makers may opt, for driving the economy out of recession.


Richa Shukla
Globsyn Business School