Stockmarket Reality Check: Will it affect economy too?

Source: Business World
The stockmarket has crashed. But will it affect the economy?

Has the dreaded ‘perfect storm’ hit the world economy yet? When Raghuram Rajan, chief economist, International Monetary Fund (IMF), used that evocative term late last year, the very idea seemed absurd. The Sensex was still a long way away from 12600, foreign funds were pouring in and commodity prices were still hitting new highs every day.

Now, after a month in which the Sensex has fallen 25 per cent (and still counting), and emerging markets as a whole have had their worst month since the late 1990s in the aftermath of the Asian crisis, ‘perfect storm’ doesn’t seem that far-fetched any more.

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