World Economy and Crisis
The world economy, which is also
called the global economy, means all the economies of the world combined and
how they inter-relate with each other.
It is very important nowadays that we should know about the economic
situation all around the world because sometimes it directly or indirectly
affects us. International financial
problems like inflation ( rising prices), credit crunch (no cash available for
loans by banks) as well as foreign exchange rates ( rate of one country’s currency
in terms of another currency) and foreign trade are the key points to be taken
care of, for smooth running of any country’s economy. Due to this, there is a
need to regulate international money and financial matters, which are looked
after by the World Bank, International Monetary Fund and such
organizations. These organizations
ensure smooth running of financial dealings as well as trade issues between all
countries of the world. The world economy is not only related to money but also
human resources (the people), who work and earn money for themselves and pay
taxes to their governments. It is necessary to provide good employment to
people so they bring economic development to their country. Overall, when all
countries develop, the whole world economy develops. Every year it is
calculated how much the world economy has grown or slowed down.
Regular checking and monitoring
of the economic situation helps a country to save itself from any crisis. The
latest international crisis was in the year 2007–2008, which is considered to
be one of the worst in world history. It started due to the banks’ huge amounts
of money spent and invested in housing and shares in the USA. Finally, on one
day, as people heard that some crisis was coming, they all rushed to banks and
asked to take out their money. The banks did not have such a huge amount on the
same day and many account holders could not get their money. There was a shortage of cash everywhere and
no bank was ready to give any loan. It created a big issue as people demanded
their own deposited money back. It resulted in the total disaster of some large
financial institutions, the closing of banks by national governments, and huge
losses in stock markets around the world. In many areas, the housing market also
suffered, resulting in people leaving the houses, foreclosures (selling of
houses due to non-payment of house loans) and high rates of unemployment. The
crisis played an important role in the failure of many businesses, losses in
people’s wealth in trillions of US dollars, and a downturn in economic activity
leading to the 2008–2012 global recession (prices fell, industries closed due
to losses, unemployment increased). Still it was not that serious as we can see
from the picture below. Here are the figures of some important regions of the
world and their economic growth rate ( GDP= Gross Domestic Product Total
number of goods produced in a country)
From this picture, the World
Bank's own figures can be seen, that the worst year 2009 of "global economic crisis”, shows negative
results in only 3 regions out of 7,
namely Europe, Latin America and the Caribbean, and North America. In this way this was not a big global
recession. In fact, East and South Asia grew by as much as 7.5% in the same
year. Also the Middle East and North Africa were progressing with 1.8% growth
rate. In other words, in the year 2009, half of the world's population was
experiencing a major economic boom (progress). The rest of the population was
facing economic crisis. A report, by
Yale Global gave information on why the crisis started, how it affected the
industries and consumers around the world, especially in the USA and Europe and
the solutions which have been proposed by experts. According to them, the
crisis resulted in: a) massive
unemployment; b) the closing of state social welfare programs, and c) more
people became poor. Moreover, a bigger problem was this worldwide economic crisis
came together with a worldwide militarization (wars, army, defence spending),
by some big powerful nations.
These nations are spending huge amounts of money on army, defence,
attacks and international policing. This money could be used for human welfare
projects , to reduce poverty and spread education and healthcare.
About the world crisis Mr. Barack
Obama , President of the US said in a debate:
"I am optimistic about the
capacity of us to come together with a plan." ( September 27, 2008)
Source:
http://dalje.com/en-world/obama-mccain-quotes-on-financial-crisis-economy/186677
Even now in 2013, another global
economic crisis looks like coming recently but the situation is not so bad. The
global economy has faced risks but the things now look better. Financial market
conditions continue to improve. But the recovery and progress is not so smooth. As per history, usually the economic
recoveries after financial crises are slow.
All the countries have to work hard to balance their losses with more production
and profits for long term growth. For
this, they need to plan reforms and work on them to boost product quality and
job creation. Financial organizations
should be helped to recover from their losses and start giving loans to
businessmen. The challenges that we must work on are steady economic growth and
financial stability and these should be shared by many global partners. That is
why greater cooperation and coordination of policies is essential. For this cooperation, the World Bank and International
Monetary Fund come for help especially to small and poor countries. They try to
bring investment in industries and create employment opportunities for people,
to make them independent and useful for their country. Overall, when all
countries develop, the world economy also develops, which means, in general, we
all live in a better society.
References:
1.
http://www.opednews.com/articles/What-global-financial-cr-by-Niloufar-Parsi-130513-645.html
2.
http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008
3.
http://yaleglobal.yale.edu/content/global-economic-crisis
4.http://www.globalresearch.ca/the-global-economic-and-social-crisis-why-we-must-fight-the-new-world-order/5334020
5.http://www.opednews.com/articles/1/Global-Economic-Crisis-and-by-Richard-Clark-130513-836.html
6.http://www.globalresearch.ca/europes-economic-crisis-unemployment-hits-record-highs-in-spain-france/5333053
7.
http://english.pravda.ru/russia/economics/07-05-2013/124503-russia_economic_crisis-0/
8. http://europa.eu/rapid/press-release_SPEECH-13-353_en.htm?locale=en
