Essay: The Effects of Global Financial Crisis

The global financial crisis is creating numerous problems and economic slowdown in most of the developed countries. Different governments and financial analysts are trying to form different bonds and they are trying to stop this menace and it is suggested by analysts that the worst is still not over yet. Industries might experience more pressure and they might suffer in the near future. Before the financial crises the stock markets were running quite well and they had received different heights but after the financial crises the stock market gone down by more than 40%. The investment banks have actually collapsed and interest rates are falling down.

The interest rates have been cut down because of these crises and they have also affected the economic activity, shipping rates and the economy of the world was declining at that time. Unlike developed countries this turmoil was also faced by developing and underdeveloped countries (ODI 2008). There are different reasons which actually depict that how these financial crises hit the developing countries and analysts actually believe that the current financial crisis hit the developing countries in two possible ways. The first point is that there would be a financial contagion and spill-over takes place in the emerging markets. This would quite eminent in the Russian stock market which stopped trading twice just because of this. The Indian stock market was badly affected by this and it dropped by more than 8 % in a single day. In the similar manner other stock markets like USA stock market and Brazilian stock market also suffered because of this. The analyst at that point actually said that every analyst and the decision maker in order to curb these crises should understand the nature of financial crisis. In the similar manner everyone should understand its aftermaths and the disastrous nature of this menace. Therefore, it also be said that the economic downturn in the developed countries should impact the developing countries and there are different channels of impact on the developing countries which would actually include the following aspects like trade and trade prices, remittances, foreign direct investment, etc.