Friday, October 10, 2008

The effect of the financial crisis nationally and worldwide

The current crisis is likely to have an impact worldwide even for countries not needing bailouts to save their banks and other financial institutions.

For Morocco, it is a country that depends on foreign investments, remittance from its migrant population which yearly channels billions of dollars as well as tourism and agricultural exports to the EU. In view of the current crisis, it is likely to be hit or to have many of its development projects at halt, not to mention the postponement of an increase of the workers’ salaries.

What can save Morocco is a rainy season, at least for those with a very limited income not to suffer further increase in food prices.
The good news for those with deposits at banks, they have little to fear as banks are semi-public sector. But the state is likely to feel the pinch as reduced investment means job cuts and a reduction of job creation in other sectors.

China is likely to use the current financial crises to defend its economic policies based on direct state interventions in key economic areas. But now as its economic activities are largely based on external exchange mainly with the USA and the EU channelling hundreds of billions of dollars, it is likely to have itself a slowdown in its economy.

This means giant economies from China, India and G8 should have common policies to deal with the current crisis. If each country tries to have its solutions, this can lead just to temporary easing of the crisis, but structurally, the economy will still be exposed to negative fluctuations.

If there is any good news for the poor around the world, it is that the rich can’t afford their customary luxuries they way they used to. Now they will have to think twice about them, they way the poor think twice about buying basic commodities to balance their dismal budgets.

Maybe it is time for the rich to consider their excessive greed and speculations are the fundamental cause of their downfall which will be catastrophic for all, rich and not so rich.

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