The Impact Of Global Financial Crisis On Global Growth And...

In 2007, as the housing bubble in the US burst and a liquidity crisis began, financial markets around the world were sent into mayhem. The global financial crisis (GFC) had begun, and was setting out to be the deepest recession since the Great Depression of the 1930s. The GFC was resultant from unbridled greed by the bankers including the issuing of risky mortgages, the inability of relatively poor consumers to manage their mortgages, inadequate regulation of the financial system, as well as a long term slowing down in the vigour of the advanced economies (Bramble, 2011). But how did this crisis impact upon global trade? What were its repercussions on global growth and movement? And how did the global economy, as well as domestic†¦show more content†¦The fall in imports cushioned the blow of the huge fall in exports, and in some countries saw a positive impact on the trade sector of output in their economy, however as an aggregate, global trade diminished largely (McLeod, 20 13). An example of this is seen in the world merchandise imports market, which saw imports fall by 36% from 2007 to 2008 (UNCTAD, 2010). Furthermore, global trade fell around 12% in response to the GFC, leading to lower global demand and the tightening of credit conditions, and resulting in lower trade flows (OECD, et. al., 2010). This impact on the global trade contributed to the fall in world GDP of 2.2% (UNCTAD, 2010), indicating that the GFC had a negative effect on global growth and globalisation in general. While the GFC predominately impacted the financial market in the USA initially, and subsequently in financial markets across the world, wider impacts were continuously discovered as time went on and governments began to react. Disorder was created within markets around the world through tighter credit availability, currency turmoil, and their direct effect on trade (Norris, 2009). The USA, as the principal