The 2nd wave of global financial crisis: myth or reality?

Lebedeva Karina,Financial University under the Government of RF,

International Finance Faculty,Group 2-4

The USA

Forecasted budget deficit in 2011~ $ 1,5 trillion Government debt~14,3 trillion

Fall in stock market indexes all over the world

But US securities are still considered as the most reliable in the world, and $ remains the world currency

The USA is not interested in the default, because the funds of the majority of developed economies are pooled in the US-debt Budget deficit reduction program (4 trillion for 12 years-Obama (higher taxes); for 10 years-Republicans (lower spending))

China

ACHIEVEMENTS

Economic growth in 2008 – 9%, in 2009- 9,2%

2nd economy in the world after the USA

RISKS High risk of financial

bubbles, because of large amount of funds injected into economy during the crisis

The fall in demand for Chinese-exports may influence quotations, especially on metal exchanges.

5-year quality plan + reduction of growth to 7% = attempt to eliminate the risks of overheated economy

The European Union

Stabilization fund: high costs for economic

leaders such as:

Stagnation, reduction of tax revenue,

constant risks of default in:

Spain

Ireland

Portugal

Greece

Germany

France

Instability in foreign exchange market

Fluctuations of oil prices

Japan

Forecasted fall in GDP

Negative influence on the economies dependent from Japan (3d in the world). E.g. Such companies as General Motors, Ford, Renault-Nissan, Volkswagen etc. suffered from the stop of Japanese auto-production Fall of demand for oil, decrease in oil prices

Russia

Increasing oil prices , but no GDP growth. What will be if oil prices begin to fall?

Only 3% from world GDP – little influence on global decisions

According to the forecasts of Russian scientists based on the analysis of prices of oil, gas and gold, the 2nd wave of crisis will take place in July-August 2011

High expected inflation rates

The main financial risks for global community

Excessive liquidity as a result of anticrisis measures in developed countries (too many oil future contracts)

Inflation risks in the EU and in the USA (Treasury bonds purchase for $600 bn), in China (more than 5%)

Global demand re-balancing: reduction in consumer-demand within the developed countries; stimulation of consumer demand in the developing countries+ control of too high economic growth

Thanks for your attention!