InvestorQ : Due to the pandemic situations, the economy has slowed down drastically and is similar to the global financial crisis of 2008, when interest rates had fallen to similar lows?
Ira Shah made post

Due to the pandemic situations, the economy has slowed down drastically and is similar to the global financial crisis of 2008, when interest rates had fallen to similar lows?

Answer
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Niharika Kamble answered.
3 weeks ago


I think you are missing the context here. The economic scenario during the crisis of 2008 and today is completely different. The 2008 crisis led to the Federal Reserve pumping money (stimulus) in the United States economy in a bid to bolster demand. These dollars then found their way across various parts of the globe in the form of investments. And India was one of the beneficiaries too. That is not the case today.

Given the macroeconomic situation currently, the Reserve Bank of India (RBI), has been trimming rates to boost demand in the country that has been ravaged by the Coronavirus. The whole supply-demand dynamics have been turned upside down due to the pandemic. Given the unusual response(lockdown) to the deadly virus that is still a mystery to us, the country is just about opening up to a semblance of familiar normalcy.

But at the same time, a lot of resources, time and efforts are being utilized to control the virus, which hasn’t happened as yet. To answer your question, the benefit will not be similar to the ones we witnessed in 2008. Today, as an economy, we will be in a better position if we survive the pandemic without slipping into an economic depression. So yes, we could benefit, but the context of what is beneficial has changed drastically since 2008.