If the economy is growing then why real estate and share market isn’t growing? - letsdiskuss
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Home maker | Posted on | Share-Market-Finance

If the economy is growing then why real estate and share market isn’t growing?


Entrepreneur | Posted on

Let’s first understand that when we say “economy is growing”, we simply mean GDP is rising. And as it has been well established, GDP is an ineffective technique to measure the growth and development of the economy.

Now coming to your question, one of the reasons why the economy is growing but real estate and share market are falling are because of lowering purchasing power of the consumers and increased government spending. When people have less money to buy, they wouldn’t invest in the assets. At the same time, when the government is spending more, it would expand the market and reflect well on GDP.

Another reason is Stock market FUD and paranoia. Given all the hype of market crash, people are skeptical to invest in these assets. We know share maket works on sentiments......Most of them are rather saving the amount in their banks. This has crunched the stock and estate market. On the other hand, the bank is leaking that money stored with them in one way or another, which is adding to keep the GDP well intact.

Another major factor why the stock market is seeing some bad days is because of the rise of cryptocurrencies. More Indians (the high-end investors) these days are investing in the likes of Bitcoin, Ripple, and Ethereum.

Similarly, there are a handful of reasons why economy seems to be doing well at the moment. But remember this instance where stock market slumps and economy booms, it only happens rarely. It isn’t standard. And the reasons why it happens are stemmed out of temporary circumstances that only last for few months.

So now, either the stock market and real estate would rise or the economy would fall. Although we would hope it to be the first one, current trends suggest that it would be the latter one.