Global Financial Crises Affected The Pakistan

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World Financial Crises of 2008

The 2008 Worldwide Monetary Crisis was the worst crisis of history. The Crises of 1930 were known as the Great Depression. It has emerged worldwide after the failure of financial titans such as Lehman Brothers, etc. The problem was the result of a series of problems including a program loan problem. The Economic Crisis is still spread through various channels such as financial integration, trade. The researchers have concluded that the main reason for these crises was started from the industry of Finance. Because of deregulations, due to these deregulations’ banks are involved in the Hedge Funds business with derivatives. Also, at the of crumble of derivatives. Banks have closed the business of lending with other banks.  

The Consequences of The World Financial Crises

The global financial crisis has had serious consequences. Even these crises went near to the complete collapse of the financial system. The crisis has led to financial problems. Poor countries are being pushed further into the trap of poverty. Global gross domestic product has declined sharply as the actual GDP growth rate dropped to -1.9% in 2009. Global financial markets have seen declining stock prices and bonds. Policy efforts were taken around the world to reduce the effects of the disaster. The United States and Europe have announced billions of dollars' worth of bail packages.

Pakistan Affected in World Financial Crises

As the world was suffering from these crises, similarly the underdeveloped countries were also badly affected by these crises. Pakistan is also one of the underdeveloped countries of the world. So, Pakistan also suffered from the financial crisis as the GDP growth rate plummeted and led to economic instability. Pakistan's current account deficit and Pakistan's budget deficit have affected 8% and 7% of GDP respectively. This paper considers the GDP to be a variation dependent on other independent variables such as trade deficits, current account deficits, deficits, and inflation. GDP is taken as a measure of macroeconomic stability. This paper further highlights and analyses the government's preferred monetary policy and strong monetary policy followed by the State Bank of Pakistan.

Post Crises controls by the World

Now the world is focusing on controlling the factors which can cause happening of such crises again. Especially the efforts of the International Monetary Fund (IMF) in this regard are appreciable. IMF has starting close surveillance and monitoring of the financial systems of the countries and as well keep in close contact with the economic policymakers of all countries of the world. To avoid and mitigate the risk of accordance of any financial crises in the future. As New World has globalized it creates new opportunities and eases human beings but at the same time, it has also created the new big gap for happening of any unfavorable event or loss. That is why the new regulations are being implemented and new updates are being monitored by the world financial regulatory agencies.

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