Financial Crisis 2008
Financial Crisis of 2008 and its impact on Pakistan
Following the financial crisis that broke in the US and other Western economies in late 2008, there is now serious concern about its impact on the developing countries including Pakistan. No doubt about that there are particular countries that will be adversely affected, there will also be countries that may be less affected, may avoid recession, and may recover sooner than expected. Although current Pakistan’s Economics downturn has been caused due to its internal economic problems instead of global financial crisis but its economy may suffer as the global financial crisis prolong. This paper discusses the global financial crisis, reasons of Pakistan’s economic meltdown and foreseeable impact of this crisis on Pakistan’s economy. Finally, some options available to Pakistan for minimizing the impact of the crisis have been discussed. The crisis accentuates the urgent need for accelerating financial development, both through domestic financial deepening, domestic resource mobilization.
1. Introduction
Indeed, the crisis that by October 2008 had erased around US$25 trillion from the value of stock markets seems largely to have been unexpected.[1] Partly this was because it came on the heels of a seven-year period of high growth and originated in the USA; many had expected a global slowdown to start in the emerging markets
Both the initial destruction of financial wealth as well as the psychological shock of seeing many elite Wall Street firms on their knees, prompted numerous commentators to initially raise the spectre of the great depression. Although not the great depression, it is indeed true that the world is staggering from financial to economic crisis as the US, EU, Japan and other high-income economies entered the recession at the end of 2008. Having decimated Wall Street and then crippled Main Street, the financial crisis seems like a hurricane about to sweep across the developing world.
Pakistan has
Following the financial crisis that broke in the US and other Western economies in late 2008, there is now serious concern about its impact on the developing countries including Pakistan. No doubt about that there are particular countries that will be adversely affected, there will also be countries that may be less affected, may avoid recession, and may recover sooner than expected. Although current Pakistan’s Economics downturn has been caused due to its internal economic problems instead of global financial crisis but its economy may suffer as the global financial crisis prolong. This paper discusses the global financial crisis, reasons of Pakistan’s economic meltdown and foreseeable impact of this crisis on Pakistan’s economy. Finally, some options available to Pakistan for minimizing the impact of the crisis have been discussed. The crisis accentuates the urgent need for accelerating financial development, both through domestic financial deepening, domestic resource mobilization.
1. Introduction
Indeed, the crisis that by October 2008 had erased around US$25 trillion from the value of stock markets seems largely to have been unexpected.[1] Partly this was because it came on the heels of a seven-year period of high growth and originated in the USA; many had expected a global slowdown to start in the emerging markets
Both the initial destruction of financial wealth as well as the psychological shock of seeing many elite Wall Street firms on their knees, prompted numerous commentators to initially raise the spectre of the great depression. Although not the great depression, it is indeed true that the world is staggering from financial to economic crisis as the US, EU, Japan and other high-income economies entered the recession at the end of 2008. Having decimated Wall Street and then crippled Main Street, the financial crisis seems like a hurricane about to sweep across the developing world.
Pakistan has