Sending More Positive Messages to Global Economy

  • 15 October 2008

Recent wide-ranging intervention by governments around the world has helped in confronting the current global financial crisis and in accelerating the adoption of joint measures to restore calm to the markets. This intervention is reflective of the seriousness of governments in taking bold and speedy decisions. This is reflected in the upswing which share markets have experienced, after they had sustained heavy losses. The International Monetary Fund (IMF) recently stated that the recovery of the international stock markets shows that cooperation among global economies to avert the adverse effects of the financial crisis is “succeeding”. This should help in sending a positive and confident message to the world markets and in building a combined front. The economic projections of the IMF confirm that the world would be able to overcome this crisis provided it continues to respond and cooperate in a comprehensive way.

The positive outcome of the economic measures that were taken individually and collectively have slowly started showing their results. But this does not mean that the financial crisis has ended or that its adverse impact has disappeared. The dangers remain and the psychological factors are still having a negative effect on the process. Undoubtedly, the historic financial collapse has eroded confidence in economic institutions, and markets would take a long time to recover, especially as confidence is the key factor in regulating markets. This means that international regulation is facing a severe financial crisis that should be active and strong to check the complex repercussions of the crisis because the issue is not limited to stock markets only but to all sectors of the economy. The dangerous adverse effects of the crisis at various levels necessitate greater and more effective international cooperation as according to some reports the ill-effects have not even started to appear yet.

Despite the enormity of the crisis and its catastrophic impact, signs are emerging that the world is slowly overcoming the financial mayhem, but the need for greater international cooperation and collective and speedy action in facing the crisis will remain essential. Moreover, careful study and analyses should lead to important lessons for establishing necessary measures to avert a repeat of the crisis in future.