What is an L-Shaped Recovery?
An L-shaped recovery refers to substantial losses in economic growth followed by a period of stagnation. Represented graphically, GDP data looks like the letter "L."
How Does an L-Shaped Recovery Work?
For example, suppose country ABC experiences a decline in gross domestic product (GDP) from $100 billion to $80 billion between 2002 and 2003. If country ABC's remains at $80 billion until 2008, the country experienced an L-shaped recovery as shown below:
Why Does an L-Shaped Recovery Matter?
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