Toll-Free Numbers

      Call me back Live Support
Free «Causes, the nature of the European crisis and their impact on the World economy – The US economy, Asia, or Africa» Essay Sample

In 2008, a large-scale crisis spread to many countries. It began in the United States. Pretty soon the crisis started in Europe, which led developed and developing countries to the crisis.The crisis in Europe is not started by itself. It was caused by preconditions. If we wanted to explore the European crisis, we should investigate these preconditions. It was the crisis in the USA. The reasons of the global economic crisis should be explored. One’s goal in this paper is to consider the impact of the crisis on the World economy.

To achieve this goal, one has organized the paper into three sections. In the first section, one should investigate the preconditions of the European crisis. They were started in the USA, one should investigate the US crisis. In the second section, one should discuss the course of the crisis in the main European countries. One will end the paper with the third section, examining the impact of the crisis on the Asia and Africa.

The global economic crisis in the USA

The global crisis in the USA was not unexpected for all experts. George Soros, Warren Buffett and other financial experts warned that risky mortgages of the U.S. banks lead to bad consequences. However, no one could guess the exact moment when the crisis starts in the U.S., as well as its scale and impact on the global economy.



    Preparing Orders



    Active Writers



    Positive Feedback



    Support Agents


Title of your paper ?
Type of service ?
Type of assignment ?
Number of pages ?
Academic level ?
Timeframes ?
Spacing ?
Currency ?
  • Total price
Continue to order

Preconditions for the global crisis occurred in the United States in early 2006. At that time he was associated only with the U.S. Primarily the U.S. mortgage market collapsed. For this reason, many mortgage operators declared bankruptcy, lost millions and completely went off the market . Central banks of many countries in Europe as well as England, Japan, USA and Australia lowered rates of money market and engaged intervention. Despite of their efforts, in August 2007 the whole world system had a deficit of liquidity. Small progress was on September 2007, because the Federal Reserve System of the United States has decided to lower refinancing rate by a half percent - from 5.25% to 4.75%. However, the crisis in the U.S. has continued despite the efforts of the FRS. An interesting situation occurred in the British mortgage bank Northern Rock, which received more than twenty billion from the Central Bank of Britain. But as a result investors in just a day took more than four billion. After that investment bank Merrill Lynch lost about a billion dollars.

In November - December 2007 the situation continued to get complicated, and the U.S. government has prepared a special package of anti-crisis measures aimed at "resuscitation" of banks and default borrowers. In 2008, almost all countries were trying to save the situation and to eliminate crisis, to reduce financial losses. For example, in September 2008 Central Bank of Japan doubled the exchange of foreign currency assets with the Federal Reserve System. The amount of losses of some global giants was highly impressive: "General Motors" in November lost more than four billion dollars. "Ford" dismissed nearly three thousand people.

World mutual aid tried to reduce or eliminate losses. To help developing countries overcome the effects of the global financial crisis, in November 2008 the World Bank decided to allocate an additional hundred billion dollars.

 In 2009, the crisis continued to increase, threatening to escalate into a global depression. Experts expected that the peak of the financial crisis would have been on first-second quarter of 2009. So it was. U.S. authorities and others were working hard to overcome it, but they could not stop a process of slowing of economic growth.  However, the rate of unemployment rose, entire industries stopped, default threatened some countries.

Thus, the financial crisis the U.S. became a global. It marked the beginning of the crisis in Europe.

Course of the crisis in the main European countries

Impact of the crisis on the UK economy

Experts from the British Chamber of Commerce warned that the UK economy had entered a recession that threatened the a sharp increase of unemployment. The report analysts noted, that formally the UK economy cannot be described as recessive. But t it has already happened and the situation was deteriorating.

The recession in the UK economy continued in the following year (2010), even when, as in most developed countries recession had changed into growth (according  to the International Monetary Fund (IMF). GDP fell by 0.2% in 2010.

That year, the IMF predicted the biggest reduction of the UK economy since 1944. Recession was 2.8%. The UK government has allocated stimulating aid package of the total amount of 30 billion dollars. In 2010 all members of the monetary policy of Great Britain have voted for a reduction of the discount rate to  0.5% and acquisition of assets of 75 billion pounds ($ 105 billion). Average unemployment in the UK was 6.5%. In the last three months of 2008 the number of unemployed increased by 165 thousand, for the first time since 1997. National Statistical Service of the UK reported that it had exceeded 2 million people.

The situation continued to deteriorate. In January 93 thousand people asked for unemployment benefits. In February the figure was - 138 thousand. That was the largest increase of the number of officially registered unemployed since 1971. Number of vacancies fell by 15%. A growth rate of revenue dropped to 1.8%.

Get 24/7 Free consulting
Toll free

It should be noted that unemployment in the UK was lower than in other countries. In the U.S., it reached 8.1%. The unemployment rate was 7.6% in the European Union. The highest rate was in Spain (14.8%) and Latvia (12.3%), the lowest - in the Netherlands (2.8%) and Austria (4%) (Eurostat estimation). President of the Bank of England Mervyn King warned that there was a danger of the return of the era of mass unemployment in the UK and in the world.

Implications of the crisis for Germany

“Most current economic indicators suggest further deterioration in comparison with Q4 2008”, - the report of the Ministry of Finance said. “The recession has intensified. According to the German economy a serious blow caused the weakening of global economy. In recent years, the economy earned a lot because of a sustained demand for high-technology goods. Now the global recession is going on and as a result, reducing of the demand for such products is also going on and has a particularly strong impact on German companies”, - a document declared . Reducing of German GDP was 4.5% (not 2.25%, as it was predicted). That was the strongest recession that the country’s economy, which was in fifth place in the world, was experiencing since 1990. Meanwhile, the Munich-based Institute of Economic Research said the index of business climate in Germany fell to a record low in its history level of 82.1 points.

Nevertheless, the net profit of the German building group Hochtief AG rose by 24.4%, and reached 175.1 million euros. Similarly, the net profit of the German company Adidas has increased by 16% - up to 644 million euros.

The consequences of the global crisis for France

French economy was experiencing the worst recession since the postwar years. The budget deficit doubled comparing with ”pre-crisis” standards set by the EU. Revised budget projections of French government were talking about it. Ministry of Economy confirmed these data. New figures sad for French government was presented by the Minister of Economy Christine Lagarde. According to the previous official forecast French economy is expected to grow by 0.2-0.5% this year.

Save up to

We offer 10% more words per page than other websites, so actually you got 1 FREE page with every 10 ordered pages.

Together with 15% first order discount you get 25% OFF!

New projections show that the French economy will probably shrink by 1.5%, according to Reuters, citing a source in the French parliament. It's bigger figure than GDP decline during the oil shock, which led the economy to the recession in 1975.

At that time GDP fell by 1%. The French government has spent billions to support the banking system and the economy as a whole, ignoring the usual restrictions imposed by EU rules of lending. The budget deficit fell to 5.2% in 2010 and to 4% - in 2011, but it is still within the limit, which was established by the Maastricht Treaty.

Impact of the global crisis on the economy of Switzerland

Merrill Lynch published a report which assessed the economic vulnerability of 44 countries in the current unfavorable financial situation. Switzerland ranked  second place (after Australia) (Merrill 4). To support the financial market of the Switzerland Central Bank cut interest rate to 2%.

As a result of the crisis UBS (the largest Swiss bank, which operates in 50 countries) was affected most of all. UBS net loss was 7.3 billion euro (compared with a profit of $ 5.21 billion last year). The bank had to write off assets related to the mortgage sector in the U.S. amounting of 4.4 billion dollars. To save the bank, the government adopted a number of measures. UBS listed currently illiquid securities (60 billion euro) from its balance sheet to a separate fund.  A central bank in Switzerland will maintain this control during the next time.

According to the Upper House of Parliament tax revenues into the state treasury could shrink by 867 million dollars. Thousands of Swiss financiers, economists and analysts found themselves out of work - primarily crisis has affected this particular sector. The UBS  was the leader in reducing workers  - about 9,000 people were dismissed there and it plans to dismiss another 2000. But the situation in Switzerland still was quite stable: the unemployment rate was approximately 2.5%, while export of products increased by 3%.

VIP services

extended REVISION
2.00 USD


Get an order
Proofread by editor USD

Get a full
PDF plagiarism report
5.99 USD

VIP Support 9.99 USD

Get an order prepared
by Top 30 writers 10.95 USD


Switzerland's GDP declined during the economic crisis, but slower than it was predicted. Considerable part of the reduction was because of deterioration in global trade.

Both of export and import dropped, but export reductions by 8.1% comparing with import reduction by 5.8% created a situation, which could not disturb the government.

Similarly, export of expensive watches from Switzerland fell by 22%, according to data of Federal Customs Administration of Switzerland. It was recorded that the highest rate of decline of watch export occurred. Supplies to Russia, the U.S. and Saudi Arabia reduced most dramatically. Thus, deliveries to Russia were lower by 64%, to the U.S. by 48% to Saudi Arabia - by 55%. Manufacture and sale of watches was one tenth of Swiss export. That sector employed more than 48,000 people.

Nevertheless, owners of the famous Swiss ski resorts despite the global financial crisis calculate profits and hope for a record. It is expected that the next average decrease will be extremely small, because during the season of 2009/2010 record of attendance was on Swiss ski stations.

Impact of the global crisis on the economy of Asia

Situation in China

After the crisis, China has successfully made the task - to provide 8% growth in the economy. According to the State Statistics China, China's GDP last year was 33.535 trillion yuan (about 4.910 trillion dollars), and increase by 8.7%.

Under the influence of the global financial crisis the year of the crisis was the most difficult year for China's economy. But despite the difficulties, the Chinese government has managed in a short time to restrain a significant slowdown in economic growth through the implementation of active fiscal policy and moderate monetary policy, as well as through a number of measures to ensure economic growth, to adjust of economic structure, to deepen reform and improve welfare.

Because of the growth of domestic demand growth of industrial production in China increased by 11%.  The economic efficiency of enterprises increased slightly, the employment situation was also better than expected.

Top 30 writers

Get the highly skilled writer in the chosen discipline for $10.95 only!

Profit of state enterprises in China totaled 1.34 trillion yuan (196.1 billion U.S. dollars. U.S.). In particular, the income earned by enterprises under central authority, amounted to 944.5 billion yuan. Earnings of local enterprises reached 394.7 billion yuan. The total revenues from economic activity of local enterprises in general totaled 22.5 trillion yuan In the sector, the most significant increase in profits.

Speaking about the industrial sector, the most significant increase in profits registered in the petrochemical industry, automotive, real estate, building materials. It was marked the transition from loss to profitability on enterprises of electricity and rail transport, prolonged decline of revenue recorded in the oil, coal and tobacco industries.

External trade of China totaled 2.2 trillion dollars. China exported goods and services estimated in 1.2 trillion dollars, showing a decline by 16%. Imports of goods and services to China totaled 1.005 trillion dollars, showing a decline by 11.2%. Positive balance of foreign trade turnover of China was 196.1 billion dollars.

 Prices of industrial products decreased by 5.4%. Consumer prices in China fell by 0.7%.

Chinese experts believe that if further spread of the global financial crisis be stopped, China's annual GDP growth will be increase( providing the absence of large-scale natural disasters and other serious problems).

The impact on Japanese economy

In 2009, Japan's economy, which is deeply integrated into the global economy, keenly felt the negative impact of the global economic crisis on the development of all industries, the financial sector and foreign trade. However, in late 2009 because of anti-crisis economic packages of Japanese government and because of the slight improvement of the global economic environment, the economy of China began to show the first signs of recovery.

According to preliminary estimates, Japan’s nominal GDP reached 474.92 trillion yen or 5.277 trillion dol during the period after crisis. Such a decrease of GDP was related with the significant decrease of the index of industrial production from 103.8% in 2008 to 80.5% in the coming years (the average rate).

VIP support

VIP support services:
special attention is assured! $9.99 only!

  First of all, it was due to the decline of production of leading industries, forming mainly export capacity, machinery and instrumentation. GDP per capita was approximately 41,420 dollars.

Deflation and low consumer demand were the characteristic features of the economic crisis in Japan. Financial system is overburdened of significant debt, the amount of which reached about 180% of GDP (the highest among the Group of Seven).

Labor resources were 66.17 million. and they were sectoral distributed approximately as follows: in the service sector - 70%, industry - 25%, and agriculture - 5%.

As part of measures to reduce the impact of the global financial crisis on the socio-economic situation in the country, the Japanese government approved five economic crisis packages. A social protection, support to small and medium enterprises, financial and banking sector, stimulation of domestic production and construction, and development of domestic consumption were the purpose of them. It was planned to implement by increasing purchasing power of families. In 2011, because of economic incentives of the Government and a gradual increase of export, especially in Asia, there was a slight economic recovery. Real GDP of index of industrial production were falling not so fast (Chomsky 3).

There has been an increase of domestic consumption. Analysts said, it had been the main factor that allowed to achieve a substantial growth of GDP.

The total turnover of Japan with other countries was 1132 billion. dollars (580.91 billion. dollars - Japanese export, 550.98 billion. dollars - import). However due to the global economic crisis and reducing of demand for Japanese goods export declined by 25.1% in some partner countries in North America and Europe. At the same time import decreased by 27.1%. Trade surplus was 29.9 billion dollars.

China with Hong Kong remained the major trading partners. An additional factor that negatively influenced the development of export, was high rate of the yen comparing with the U.S. dollar.

During the first three quarters of 2009, despite the financial crisis, Japan has invested in other countries 59.6 billion dollars. The largest investments were directed to the U.S., China, the Netherlands, India, UK, Brazil and so on.

Want an expert to write a paper for you Talk to an operator now  

According to the Japan Bank for International Cooperation after the financial crisis, many Japanese companies have made successful investments abroad. It was made in food production, including the company "Nissin Foods" in Russia, "Ajinomoto" (Thailand and Cambodia), "Asahi Breweries" in China, Korea and Australia, "Q.P.Corp." in Malaysia, "Lotte" in Thailand and others. It was also made in the production of consumer goods, including company "Unicharm" in Egypt, China, Russia and India,"Pigeon" in China and India, "Lion Corporation" in Thailand and Indonesia, "Hakugen" in China,"Iris Ohyama" in China.

Representatives of the Cabinet of Ministers of Japan believe that the recent positive GDP figures indicate a gradual recovery of the Japanese economy. Another positive indicator is the increase in domestic consumption. Analysts say, it is the main factor that allows to achieve substantial growth of GDP.

It is expected that Japan's economy will gradually come out of the crisis, because of growing of consumer demand, domestic and foreign investment. Implementation of the Government's economic measures for demand stimulating will facilitate this.

However, high level of unemployment is expected to be kept. Prices will continue to decline, particularly the deflation of consumer goods is expected to come.

Impact of the global crisis on the economy of Africa

The impact on the economy of Libya

Despite the fact that the falling of oil prices was one of the consequences of the global financial crisis (which led to a shortfall in Libyan significant budget commitments), it does not impact significantly the overall socio-economic situation in Libya. It remained mostly stable during the years after the crisis.

Oil and gas sector was the basis of the Libyan economy (about 69% of GDP, 98% of export revenues and 90% budget revenue). Planned state budget expenditures exceeded expected revenues due to the global economic crisis and a significant drop in world oil prices. According to experts, further decline of GDP to 5.1% is expected.

Plagiarism check

Attractive plagiarism check option:
ensure your papers are authentic!

Leadership of Libya paid great attention to the modernization and reconstruction of industrial enterprises, pursuing liberal economic reforms (reforms of including and diversification of economies, reducing its dependence on oil sector). These reforms were primarily taking place in the branches of the light industry, installing appliances and food industry. Promotion of foreign investment also was the purpose of these reforms.

Libya has significant gold and currency reserves and invests not only in neighboring African countries, but also in the EU countries, especially Italy and Germany, as well as Latin America. Libyan Investment Authority (the main state coordinating body in the sphere of investment) currently explores possibilities of investment in Western European countries and the U.S. It has already opened an office in London.

According to the trade and economic mission in Libya, measures to tackle the crisis in the economy of Libya are not carried out over the last period.

Thus, the economic situation in Libya, despite the global financial crisis remained stable. Libya could not fully integrate into the global financial system because of underdeveloped internal financial and stock markets. It allowed the economy to avoid serious losses due to the global financial crisis. Besides high world prices for hydrocarbons during recent years had created a solid foundation for its consistent recovery and allowed Libya to take surplus budget.

Impact of the global crisis on the economy of Morocco

The global financial crisis has significantly affected the volume of Moroccan export. The results show the losses of nearly  6 billion dollars. Sales of phosphates and derivatives of minerals (main group of Moroccan exports) decreased by 64%. Analysis of the structure of Moroccan export shows that almost all groups of export (excluding gold) showed a downward trend during the last years.

Proofreading service

Do you want your papers to be flawless?
Use our proofreading service!

Exports of semis decreased by 42.6%, phosphoric acid - by 64.8%, fertilizers - 50%,  energy products - by 32%, finished consumer goods - by 2.2%. Food took third place among a group of exports, despite the increase of their share by 4% in amount of total export.

Regarding imports, Morocco imported by 35.3 billion dollars, which showed a decrease of 19%. Imports of oil fell by 44%, and cereals - 50%.

However, the economy of Morocco has maintained relatively high growth rates, despite the financial crisis. Thus, the main factor of economic growth included increasing production of agriculture. The positive climate allowed water to accumulate significant reserves for irrigation, as well as to collect a record harvest of grain.

The government has pledged to continue efforts to maintain the purchasing power of citizens through a compensation fund. It was allocated two billion dollars per year for this fund. Particular attention will be paid to increase the competitiveness of enterprises of Morocco and their attractiveness for private investment (both domestic and international).

"Blue Morocco Plan" was submitted in September 2009, by the Minister of Agriculture and Marine Fisheries A. Akhanush. It was designed for preserving the rich fish resources of Morocco, for increasing GDP in three times till  2020. According to the plan the government increased the number of jobs and increased export of seafood in three times, provided for domestic industry regular supply of good quality  and raw materials. Morocco also plans to increase the share of Moroccan seafood supply in the world market and become a world leader in the manufacture of all products with sardines.

The impact on the economy of Egypt

Short-term predictions, made considering the effects of the global recession, will show the situation in Egypt  directly and precise.

It is planned to introduce third stimulus package to ensure sustainable economic development of the country. This package includes the construction of infrastructure projects, the worth of which are  20 billion dollars.

Regarding the development of foreign trade, it is planning to double exports of Egyptian industrial products till 2014 (according to the government center modernization of industry). Planned volume of export of industrial products is 36.7 billion dollars. Achievement of these indicators should be based on providing 200 thousand jobs only in export industries (excluding oil and gas) and 600 thousand new jobs in the whole industry.

Inflation was approximately  9% in 2010-2011. It is expected, that the rate of Egyptian pound will remain generally stable with slight devaluation (Wambi 2).

The global financial crisis has also affected the banking system of Egypt. Two banks (the top five) remained on the market, another two were sold to competitors, one declared bankruptcy. It is expected to overcome the global crisis till the 2015.


What Our Customers Say

Now Accepting Apple Pay!
Click here to chat with us