More nations now feel pinch of global economic meltdown
Monday, 20 October 2008
From Fazle Rashid
NEW YORK, Oct 19: Some countries have been late to feel the pinch of the global economic meltdown. Some unlikely areas like education and healthcare have also been devasted. India, Pakistan and the Middle-Eastern countries, although far removed from the centre of the global economic crisis, are now bracing to stave off the impact of the crises rolling into their shores. The only countries who have abundance of wealth are the Gulf states like Qatar and Abu Dhabi. They are flushed with petro-dollar. They are not wanting in extending their helping hands.
Gulf International Bank (GIB) which is owned by six Gulf governments has been a leading regional provider of merchant banking services. GIB was worst hit by the subprime crisis in US. The shareholders of the bank as a precautionary measure have set aside $3.0 billion to support institution which is battling to overcome the result of its exposure to distressed assets in the US. The GIB management dismissed speculation that it was being taken over by a Saudi bank. The bank management said it was on a sound footing and requires no infushion of capital.
The United Arab Emirates pledged an extra $19 billion for its banks. Qatar said it would take upto 20 per cent share in the banks so that they can go ahead with their business without facing any strain. Gulf states sovereign fund has been a lifeline for many countries and corporate giants reeling under a depleting capital base.
Pakistan is seeking support from the US, China, Saudi Arabia and multilateral lenders to help it refurbish a financial gap of $10 billion. Pakistani rupee has crashed to new lows and hard currency reserve is dwindling at a rapid pace.
Pakistan's present foreign exchange reserve is $4.5 billion. Pakistan needs to take immediate measures to restore confidence in its economy battered by high energy cost and rampant inflation due to unchecked government spending.
India's economic health has been sound. Its banking system is protected by conservative regulations. But nevertheless Indian economy has started to feel the pinch of the global meltdown. The principal reason is the foreign investors are withdrawing their equity, making Bombay stock exchange to lose more than half the value. Bombay stock exchange index which rose to 21,000 point at the start of the year has now dropped to as low as 10,000.
The Indian rupee has also been battrred. It has depreciated nearly 20 per cent. The economists in India are revising their forecast for GDP growth. India was nearing a 10 per cent growth rate. It will slum to 6.6 per cent, the economists predict. India's inflation rate has reached a record high of 12 per cent. Some said a weaker growth rate is good for India as economy was showing signs of overheating.
South Korea which has one of the strongest economies in Southeast Asia is planning to raise spending and cut taxes as part of emergency measures to stabilise the economy after fall in its currency Won and the stock market. The move has come as other Asian nations like Japan, Pakistan and Malaysia are bracing to defend their economies against the ravages of the global economic meltdown.
Meanwhile, Warren Buffet is the second richest man in the world. He is making a drive to boost the economy and instill hope in the sagging market by investing his personal wealth into US stock market. He is a strong advocate of capitalism. He strongly chided those who have converted their stock market investments into cash.
NEW YORK, Oct 19: Some countries have been late to feel the pinch of the global economic meltdown. Some unlikely areas like education and healthcare have also been devasted. India, Pakistan and the Middle-Eastern countries, although far removed from the centre of the global economic crisis, are now bracing to stave off the impact of the crises rolling into their shores. The only countries who have abundance of wealth are the Gulf states like Qatar and Abu Dhabi. They are flushed with petro-dollar. They are not wanting in extending their helping hands.
Gulf International Bank (GIB) which is owned by six Gulf governments has been a leading regional provider of merchant banking services. GIB was worst hit by the subprime crisis in US. The shareholders of the bank as a precautionary measure have set aside $3.0 billion to support institution which is battling to overcome the result of its exposure to distressed assets in the US. The GIB management dismissed speculation that it was being taken over by a Saudi bank. The bank management said it was on a sound footing and requires no infushion of capital.
The United Arab Emirates pledged an extra $19 billion for its banks. Qatar said it would take upto 20 per cent share in the banks so that they can go ahead with their business without facing any strain. Gulf states sovereign fund has been a lifeline for many countries and corporate giants reeling under a depleting capital base.
Pakistan is seeking support from the US, China, Saudi Arabia and multilateral lenders to help it refurbish a financial gap of $10 billion. Pakistani rupee has crashed to new lows and hard currency reserve is dwindling at a rapid pace.
Pakistan's present foreign exchange reserve is $4.5 billion. Pakistan needs to take immediate measures to restore confidence in its economy battered by high energy cost and rampant inflation due to unchecked government spending.
India's economic health has been sound. Its banking system is protected by conservative regulations. But nevertheless Indian economy has started to feel the pinch of the global meltdown. The principal reason is the foreign investors are withdrawing their equity, making Bombay stock exchange to lose more than half the value. Bombay stock exchange index which rose to 21,000 point at the start of the year has now dropped to as low as 10,000.
The Indian rupee has also been battrred. It has depreciated nearly 20 per cent. The economists in India are revising their forecast for GDP growth. India was nearing a 10 per cent growth rate. It will slum to 6.6 per cent, the economists predict. India's inflation rate has reached a record high of 12 per cent. Some said a weaker growth rate is good for India as economy was showing signs of overheating.
South Korea which has one of the strongest economies in Southeast Asia is planning to raise spending and cut taxes as part of emergency measures to stabilise the economy after fall in its currency Won and the stock market. The move has come as other Asian nations like Japan, Pakistan and Malaysia are bracing to defend their economies against the ravages of the global economic meltdown.
Meanwhile, Warren Buffet is the second richest man in the world. He is making a drive to boost the economy and instill hope in the sagging market by investing his personal wealth into US stock market. He is a strong advocate of capitalism. He strongly chided those who have converted their stock market investments into cash.