Current Global Economic Scenario: Problems and possible solutions
The global financial meltdown has resulted in depressed economic conditions worldwide. The crisis which surfaced in July 2007 in US spread to other parts of the world leading to stock market crashes followed by long period of stock market volatility, credit crunch, failure of a number of leading financial organizations and rising unemployment. The impact was seen across the world be it the US, Japan, European countries or developing nations. Although governments across the world stepped in and announced a number of stimulus packages to help economic recovery, the crisis is far from over. According to the mid-year report by United Nations (UN), the global economy is expected to dip by 2.6% in 2009, with weakness extending in 2010 if the stimulus packages fail to fan economic recovery. Further, the report states that developing countries are the worst hit due to the recession as although they have been badly hit by rising capital costs, capital reversals and falling world trade, 80% of the global stimulus package (amounting to US$2.6 trillion) is concentrated in the developed world. So what should be the all encompassing solution to this problem? Are the measures being taken by governments across the world enough or do we need to make some additional efforts? The solution seems to be in restoring the financial system, the backbone for any kind of economic growth. In addition, proper alignment of the fiscal stimulus is needed with a view to global development and not concentrate on development of individual nations. Corrective actions need to be taken to ensure the fundamental problems giving rise to this kind of situation (regulatory or otherwise) are dealt with and resolved.
The global financial meltdown has resulted in depressed economic conditions worldwide. The crisis which surfaced in July 2007 in US spread to other parts of the world leading to stock market crashes followed by long period of stock market volatility, credit crunch, failure of a number of leading financial organizations and rising unemployment. The impact was seen across the world be it the US, Japan, European countries or developing nations. Although governments across the world stepped in and announced a number of stimulus packages to help economic recovery, the crisis is far from over. According to the mid-year report by United Nations (UN), the global economy is expected to dip by 2.6% in 2009, with weakness extending in 2010 if the stimulus packages fail to fan economic recovery. Further, the report states that developing countries are the worst hit due to the recession as although they have been badly hit by rising capital costs, capital reversals and falling world trade, 80% of the global stimulus package (amounting to US$2.6 trillion) is concentrated in the developed world. So what should be the all encompassing solution to this problem? Are the measures being taken by governments across the world enough or do we need to make some additional efforts? The solution seems to be in restoring the financial system, the backbone for any kind of economic growth. In addition, proper alignment of the fiscal stimulus is needed with a view to global development and not concentrate on development of individual nations. Corrective actions need to be taken to ensure the fundamental problems giving rise to this kind of situation (regulatory or otherwise) are dealt with and resolved.
6 comments:
Hey.. good going. Keep it up. :)
Good to see this one. Even i am in the process of creating one. :)
thats true, i hope the world recovers or we might see the third world war.
good work. You deserve a pat on your back :)
Yes. But if the government keeps spending like crazy (as in the US) we might very soon massive inflation. And plus the future tax burden gets me worried.
Very true Md, the expected nos have started coming in and prove that the fears are very much real.
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