Rising from the depths of 2007 Global Financial Crisis

The Global Financial Crisis of 2007 has been an outcome of several business concerned and finance related backdrops. This was probably the worst of the economic crashes that the world has witnessed after the “The Great Depression” of 1930.

Several theories have been contrived to examine the roots to this upheaval, and the consequential measures to combat the heavy downfall; market based and regulatory solutions, that can potentially balance the trade flow temporarily.

Many calculative concepts devised by experts and economists to suggest that the overall situation will start recuperating by the year 2010. This deduction came in after a steady inflation was observed in oil and food prices, which owe to a huge uncertainty of the economy’s turns in the period of 2009 to 2012.

Due to the inflation, several countries, including the USA and Eurozone countries like France and the UK, had been clawed by the widespread recession.

However, it has been predicted that these developed countries, especially, will experience a brighter financial flow in 2010, as opposed to several markets that will be seeing a much worse negative growth. For example, the housing and credit markets in the USA and Eurozone are beginning to enhance, and it is estimated that the GDP growth will reach 2%, in contrast to what it was in 2009.

A similar statistical analysis reveals that the upcoming economies of today; China and India, had experienced an equally drastic scenario in the period of 2008 to 2009. Nevertheless, according to experts, an unwavering growth is on the cards for the Asian markets, which is expected to lift from 7.7% in 2009 to 8.4% in 2010, and eventually stabilizing at 8.5% by 2012.

A more threatening series of risks, which although may temporarily indicate signs of optimism but further damage the current economic equations, are the currency markets and the exposure to bad credit. The US Dollar, for instance, enjoyed an all time high in 2008 against the UK Pound, but because of inflation and, it had affected trading blocs. Furthermore, all this imposed an upward pressure on US interest rates.

Another potential risk is the unearthing of ‘bad credit’ in the global market. This can firstly, lead to the recovery of the market, and secondly, slow down the lending to consumers and businesses. (This can lead to two outcomes. Firstly, recovery of the market and secondly, it can slow down the lending to consumers and businesses.)

While there is a definite scope for foreseeing a state of betterment in the upcoming years, however, an uncertainty towards the declining market scales still persist, and therefore, it may be too early to comment on the economic recovery. On the contrary, owing to the uncertainty, it can also be said that probably the complete impact of recession hasn’t affected the markets as yet, and there may be more to follow. Some economists, despite the Great Depression of 1930, call this as the worst nightmare for markets worldwide in the last century.

In spite of the presumed recuperation, markets are still feeling the heat of a fall-down. For developed nations such as USA and the UK, GDP growth will occur from 2009 and will come to a steady margin by 2012. For developing countries, on the contrary, there will be a definite slow down in the financial growth over the same period.

As for the prices, unpredictability in the inflation levels, especially in the prices of oil and food, will act as pivotal forecasts in determining future statistics.

Shaurya Arya

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