| The year when bailout became a buzzword |
The world economic scenario at the end of 2008 looks something like a house slowly falling in. Some of the pillars have already fallen; some are in an advanced state of decay. The roof threatens to cave in, while the foundations, though not quite ready to give in, appear shaky. Every moment seems to bring the house closer to collapse; though it has not quite collapsed as yet.
The edifice of financial capitalism is holding out, for now. But it has received shocks that have placed a question mark on its long term survival. Consider the statistics:
The Eurozone, the US, New Zealand, Singapore, Hong Kong, Ireland and Japan are already in recession. Canada and UK will join them soon. Global trade, which fell 50%, is poised to contract for the first time in decades. The World Bank has cut its global growth forecast to a mere 0.9% for 2009.
Unemployment in US is above 6% and analysts predict it would go up to 8% by 2009. There are job cuts across the sector, not just in US but in other countries too. China which had posted double digit growth for years is slowing down, it is predicted that GDP growth may fall below the comfort zone of 8%. Germany’s economy is expected to contract by 2.7% in 2009.
Dipak Dasgupta, Chief Economist to the World Bank, while speaking at a seminar said that the effects of the drastic fall in world trade is yet to be felt, and it would darken the already dark picture of meltdown
All of it, of course, had its genesis in the sub prime crisis of 2007, but soon ballooned into a crisis of confidence in financial markets.
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