K-shaped recovery and Sovereign debt crisis: Difference between pages

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''Economics - recessions - recovery.''
''Sovereign debt - sovereign risk - default.''


A "K" shaped recovery is characterised by a divergence in the recovery - or continued decline - of different sectors of the economy.
Widespread conditions of potential or actual default by indebted countries, with increased sovereign risk and losses for lenders.


A chart of the key economic measures would resemble a letter "K".


:<span style="color:#4B0082">'''''Debt sustainability problems worsen over time'''''</span>


:<span style="color:#4B0082">'''''Recovery forecasts diverge'''''</span>
:"Sovereign debt crises are costly for sustained growth.


:"The impact of COVID-19 is likely to preoccupy businesses into 2021.
:One study finds that every year a country remains in default reduces its GDP growth by 1–1.5 percentage points.  
:As of early October [2020], financial markets appear to be pricing in a recovery.


:High levels of sovereign debt also have significant social costs.


:However, contingent on developing and rolling out an effective vaccination programme, economists disagree as to whether the recovery will be shaped as a ‘V’ (fast), ‘L’ (slow), ‘W’ (a second or even third wave of the virus) or – perhaps more insightfully – a ‘K’ (growth for some sectors, decline for others)."
:They reduce the government’s ability to spend on social safety nets and public goods such as education and public health, which can worsen inequality and human development outcomes.  




:''The Treasurer magazine, December 2020, p30 - ACT Technical briefing.''
:When debt sustainability problems are not resolved, they tend to worsen over time because the choices of each government constrain the options of future governments as more revenue is directed to debt service.  


:Sovereign debt crises also frequently coincide with other types of economic crises — such as financial sector crises, rising inflation, and output collapses—that have far-reaching negative consequences for poverty and inequality."
:''International Monetary Fund - World Development Report 2022 - p204.''




== See also ==
== See also ==
* [[COVID-19]]
* [[Coronavirus crisis]]
* [[Deflation]]
* [[Default]]
* [[Depression]]
* [[eurozone crisis]]
* [[Double dip]]
* [[Forbearance]]
* [[Great Depression]]
* [[Global Financial Crisis]]
* [[Great Recession]]
* [[Grexit]]
* [[Gross domestic product]]
* [[Gross Domestic Product]]  (GDP)
* [[Inequality]]
* [[Inflation]]
* [[Inflation]]
* [[L-shaped recovery]]
* [[International Monetary Fund]] (IMF)
* [[Recession]]
* [[Poverty]]
* [[Recovery]]
* [[Public goods]]
* [[Reflation]]
* [[Restructuring]]
* [[Softness]]
* [[Sovereign]]
* [[Trumponomics]]
* [[Sovereign debt]]
* [[U-shaped recovery]]
* [[Sovereign risk]]
* [[V-shaped recovery]]
* [[Sustainability]]
* [[W-shaped recovery]]
 
 
==External link==
*[https://www.worldbank.org/en/publication/wdr2022 IMF - World Development Report - 2022]


[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Identify_and_assess_risks]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]
[[Category:Financial_products_and_markets]]

Revision as of 20:54, 22 September 2022

Sovereign debt - sovereign risk - default.

Widespread conditions of potential or actual default by indebted countries, with increased sovereign risk and losses for lenders.


Debt sustainability problems worsen over time
"Sovereign debt crises are costly for sustained growth.
One study finds that every year a country remains in default reduces its GDP growth by 1–1.5 percentage points.
High levels of sovereign debt also have significant social costs.
They reduce the government’s ability to spend on social safety nets and public goods such as education and public health, which can worsen inequality and human development outcomes.


When debt sustainability problems are not resolved, they tend to worsen over time because the choices of each government constrain the options of future governments as more revenue is directed to debt service.
Sovereign debt crises also frequently coincide with other types of economic crises — such as financial sector crises, rising inflation, and output collapses—that have far-reaching negative consequences for poverty and inequality."
International Monetary Fund - World Development Report 2022 - p204.


See also


External link

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