Historically, global financial crisis tends to lead sharp economic downturns, low government revenues, widening government deficits, high levels of debt, pushing many governments into defaults. This is called as SOVEREIGN DEBT CRISIS.
GREECE is currently facing this, it accumulated high levels of debt during the decade before the crisis, when capital markets were highly liquid. As the crisis has unfolded and there was liquidity crunch in world economy, Greece may no longer be able to rol over its maturing debt obligations.
GREECE is currently facing this, it accumulated high levels of debt during the decade before the crisis, when capital markets were highly liquid. As the crisis has unfolded and there was liquidity crunch in world economy, Greece may no longer be able to rol over its maturing debt obligations.
Between 2001-2008, Greece reported budget deficits averaged 5% per year, compared to Eurozone average of 2%. Also, its current account deficits averaged to 9% per year compared to Eurozone average of 1%. Greece funded these twin deficits by borrowing in international capital markets, leaving it with chronically high external debt (115% of GDP in 2009).
Some of the facts which can be depicted from following charts :
Some of the facts which can be depicted from following charts :
- The income and savings had a downward trend worldwide after the sub-prime crisis unleashed. This has educed Revenues for the country.
- The world market had started recovering but we can say they are now in bullish run, these haky Stock Marketshad a cumulative effect.
- The reduced savings and lack of confidence among investors has resulted in lower Investment Flows.
- After the sub-prime bubble burst, tricter requisites or bank loans / higher ateshave been followed globally.
This all had a cumulative negative effect as;
- There was a Drop of tourist arrivals.
- Also, Negative impact on exports and international sea transport
As we have seen, Greece in reality has little economic trade with India. The bottom line is India's economy is far more connected and dependent on European American & Middle-Eastern Countries than back in 1982. So another financial crisis in Europe will impact India.
“ The investor’s chief problem & even his worst enemy is likely to be himself ”
Benjamin Graham
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