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Introduction

The year 2008 was one of the most turbulent ever as far as the world economy is concerned. Major corporate behemoths and financial powerhouses, the veritable symbols of modern capitalism, fell down like a pack of cards. In a flat world none of the economies were isolated from the fallouts of this crisis.

The world saw one of the toughest times in the form of a global financial crisis and an economic slowdown. With the US and UK economies contracting by 0.6 and 0.5% respectively in the last quarter of the year 2008, the major developed economies of the world were facing major slowdown or recession.

Financial crises are not a new phenomenon. The general view is that these crises are a function of mismanaged and malfunctioning markets and hence can be rectified by sensible policy actions like greater regulation, transparency and accountability. A less popular but quite valid school of thought goes ahead to say that financial crises are inevitable and endogenous to the functioning of a normal capitalist economy which allows free rein to the actions of private agents. So a financial crisis can be resolved by policy actions is a well accepted fact.

The crisis of this size and complexity was never seen before. A recovery surely required concerted efforts of not only the developed countries but also of the important economies of the new order like India & China. Thus soon after US declared its bailout and stimulus packages most of the world followed suit with all major countries declaring financial packages The total amount declared was of the tune of about 3 trillion dollars.

This paper tries to understand the various measures taken by economies across the globe and elaborates on whether such policies need to be continued further or the world economy should now be set to start moving on its own. This question has gained a major importance in the last few weeks as most economies are seeing signs of recovery and are contemplating on whether further action needs to be taken to support the economy.

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* Contributed by: -
Madhav Kumar Sharma, is a student of MBA at NMIMS, Mumbai. His specialization is in Finance. Before joining NMIMS, he had four years of work experience in the merchant navy as an Engineer Officer. His interests include finance and economics.