IS THIS recession really over? Maybe.

The downward spiral of world economies has ended. But what's next?

Will we crawl along at these low levels? Or will economies turn higher and bring us back to the go-go days of early 2007?

TEXT & ILLUSTRATIONS: LARRY HAVERKAMP & MAROO

It was only six months ago that companies said they had 'no visibility' and could offer no guidance on future sales and earnings.

Now, the same companies talk confidently about how their business prospects are great.

Oh yeah? Can things really have improved so quickly? The recovery is set to follow one of four scenarios. Here they are, listed from best to worst.

The red dot on the graph shows we are now at the bottom of the V and just starting to turn up.

It is the most widely accepted and optimistic view. The stock market expects it and anything less is sure to disappoint. Expect a market crash if things don't turn out this way.

It starts out V-shaped with the look of boom times ahead. But it isn't sustainable and we quickly drop into another recession.

This is followed by an eventual second recovery, making it W-shaped. It is the same as two back-to-back V-shaped movements and is known as a double-dip recession.

Under this scenario, the downward spiral stops but we continue moving along the bottom for a year or more before we get a recovery.

As the red dot shows, we are now at the bottom of the first leg. At this early stage, it is hard to know if we will turn up like a V or bounce along the bottom like a U.

This is like a U-shaped recovery that doesn't turn up. We move along the bottom for many years. It is a 'new normal' of no growth with life at or near recession levels.

An example is Japan's economy during the 1990s. It was L-shaped for 10 years and never came close to realising its full potential.

Could world economies be in for the same? Many economists believe we have seen a permanent change as consumers save more and spend less. Lenders are also more risk-averse so fewer projects get financed.

It produces a double whammy that has the potential to slow growth and raise unemployment for decades.

Perhaps creativity can help in a new L-shaped world. People are already talking about how 'money isn't everything'.

Who knows? Perhaps happiness will someday replace GDP as the official measure of a nation's success. It has already happened in one country: Bhutan.

Does GDP measure our well-being?

WHEN GDP declines for six months or more, we say the country is in a recession. When it turns positive again, we say the recession is over.

For most of us, however, daily life continues unchanged. GDP does not track our well-being. Take oil-rich countries. GDP is a poor measure of welfare because income is concentrated in a few hands. Many do not participate in the nation's prosperity.

In those countries, a better measure is to subtract incomes of the richest and poorest persons. Then subtract the second richest and second poorest.

Keep doing that until you get to the middle person. It is called the median income. It is less than GDP divided by the population - the average - but it gives a better picture of people's well-being.

In Singapore, GDP is also a poor measure of welfare, but for a different reason. Almost 60 per cent of our GDP is exported. If there is a big surge in pharmaceutical exports, for example, it boosts GDP but has little effect on our incomes.

For us, a better measure of welfare is a component of GDP called disposable income, but it is a non-published statistic.

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