This page is about:

The scars from the Global Financial Crisis (GFC) sit deep. It seemingly struck out of the blue, and prompted the harshest and swiftest economic downturn in living memory.

Until 2020, that is: the coronavirus is expected to lead to an even deeper global recession and may kick more people out of jobs. There are, however, two important differences between these two catastrophic downturns.

The first, and most important, is that financial systems are generally in much more resilient shape. Banks are holding a lot more capital in reserves, rendering them a lot more robust.

In fact, while the GFC, was precisely that, a ‘financial crisis’ that led to a major economic downturn, the current episode is a ‘growth shock’ with financial consequences. There could still be systemic financial stress, but so far the most important financial institutions are coping. And if they can remain fundamentally sound, the economic recovery should proceed more swiftly than after the GFC.

The second major difference is the speed and scale of the policy response. Though easy to forget: in 2008 and 2009, fiscal and monetary support was implemented more haltingly, and with occasional reversals. This time round, the Fed has gone through, and beyond, its playbook of the entire GFC period already. Other central banks and governments have also acted quickly and aggressively.

This also matters: one of the key policy mistakes after the GFC was that governments and central banks were too timid in supporting the recovery, withdrawing support relatively quickly and leaving much of the world for years struggling with sticky unemployment and deflation risks.

Here, too, lessons have been learned. And judging by the staggering policy response to the current crisis, there seems little risk this time around that policymakers will pull back before the job is done.

History rhymes, perhaps, but we have the tools and knowledge to ensure it doesn’t repeat.

Would you like to find out more? Message us at

This page is about:

Disclosure and disclaimer

More, collapsed
Join the conversation?

Join our Linkedin group to get an unparalleled view of macro and microeconomic events and trends from a bank that is a leader in both developed and emerging markets.