The Global Economic Crisis: The Origin Of The Global Financial Crisis

1318 Words6 Pages
Global Financial crisis is a situation in which the value of financial assets drops quickly. The global financial crisis is mainly associated with a panic or banks run, in which investors sell off majority of assets or withdraw money from savings accounts expecting that the value of those assets will fall if they remain at a financial institution and banks [1]. 2.1.2 Origin of Global Financial Crisis The Global Financial crisis started at end of 2008 in the United State when home prices start to fall significantly which also known as the subprime crisis. There are many reasons which cause the Financial Crisis but one of the major reasons was declining housing price in the United States. This resulted when people who taken home loans from…show more content…
At the time Governments and Central Banks had to take necessary actions to get rid of the crisis [3]. Policies such as capital injection and interest rates cuts were commonly used to help borrowers to repay loans they have taken. Because of low consumer confidence and investors confidence in the world economy has resulted in firms and financial institution around the world to filed for bankruptcy, like in the United States the collapse of Lehman Brothers. Many countries implemented the uses of stimulus packages in helping to boost their economic activities [4]. These polices such as stimulus packages helped companies and firms employing thousands of workers not to file for bankruptcy and so not increase the number of unemployed, example for the US government agreeing to help the car company Ford and Crysler, avoiding its closing down and hiring its…show more content…
Theses sectors were mainly affected due to the trade liberalization of the Mauritian economy [6]. Even though the origin of the Global Financial Crisis was not originated in Mauritius its effect was felt in the Mauritian economy. The most affected sectors in Mauritius were the textile and tourism industry. Many firms and hotels closed down. There were low level of tourists arrivals due people fall in purchasing power, affected the tourism industry extremely. There was high level of unemployment in key markets [7]. Foreign Direct Investment (FDI) fell during the crisis causing the construction industry experiencing a fall in its activities. During the same period the sugar industry had to start reforms because the termination of the European Union Sugar Protocol. There were high unemployment and the Mauritian economic growth rate was falling. However, Mauritius did not recorded negative output growth during the Financial Crisis. Measures taken by the government and the Bank of Mauritius prevented Mauritius from entering into a major

More about The Global Economic Crisis: The Origin Of The Global Financial Crisis

Open Document