Swoosh-shaped recovery
Also called: Nike swoosh recovery · Topic: Economic Growth Theories and Business Cycles · NCERT: Beyond NCERT
Meaning
A swoosh-shaped recovery is one where output falls sharply and then climbs back slowly and steadily. It looks like the Nike "swoosh" logo: a steep drop, then a long, gentle upward slope. The rebound starts soon after the fall, but the economy takes a long time to get back to its pre-crisis level. It matters because a slow climb means years of lost output and jobs. That lasting damage is called scarring: lost jobs, skills and firms that do not come back.
Example
In 2020, many projections for the world economy after COVID-19 had a swoosh shape. The IMF called the crisis "the Great Lockdown", the worst since the Great Depression. Output was expected to collapse in 2020 and then take several years to return to its old level.
Don't confuse with
- V-shaped recovery: the rebound is as quick as the fall, and the economy returns to its pre-crisis level and trend. In a swoosh, the fall is quick but the climb back is slow.
- U-shaped recovery: the economy stays at the bottom for a while before it recovers. In a swoosh, there is no long flat bottom, because the slow climb starts soon after the fall.