The global financial crisis of 2008, no doubt left a serious impact on the global economy. However, most economists, investors and analysts consider the present Covid-19 crisis even deadlier. India's top credit rating agency CRISIL too things so. Here are 5 reasons CRISIL believes that the present crisis through Covid-19 infections is even deadlier:
1. Double trouble
Unlike the 2008 Global Financial Crisis (GFC), the pandemic has resulted in enormous human suffering, not seen in decades, and has also slammed the brakes on economic activity and jeopardised financial stability
2. A dangerous cocktail of shocks
The GFC emanated from the financial sector, which choked financial flows. This hit demand, but did not cause supply disruptions. On the other hand, social distancing measures to arrest the pandemic's spread have led to an immediate disruption in supply owing to factory shutdowns, accompanied by a reduction in demand for non-essential goods and services
3. A crisis in every country
The Global Financial Crisis originated in the US, with impact on other countries dependent on how well they were linked to the US and the associated global financial system. The pandemic, however, has individually hit each country's economy,with impact from both, weaker global as well as domestic demand.
4. Same policy tools cannot work
Monetary policy alone has limited ability to spur growth in the current crisis, when consumers cannot go out to spend and businesses cannot restart activity. Fiscal policy is set to do the heavy-lifting, but they cannot be used in all economies alike due to varying fiscal space available.
5. Trade-off between health and economic costs
Reviving the global economy at present is not an easy task since most economic activity would be constrained by lockdowns.
Lifting the lockdowns could lead to a spurt in fresh Covid 19 cases, aggravating the present health emergency.
Taken from the Crisil report: Viralfever:Covid-19 impact on economy,corporate revenue and profitability