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Financial Crisis Case Study

Decent Essays

In the lead-up to the global financial crises, Greece was already struggling financially. Joining the European Union (notably below the financial requirements in place by the union) further restricted the control the Greek Government had over manipulating their economy, predominantly due to the centralized euro currency. The government had also been providing false data on their financials for some time, all of which came to a head at the time of the GFC.
Increasing debt levels and decreasing GDP saw the Greek credit rating reduced numerous times. The government introduced many austerity measures to allow them to repay their debts, however, the debt levels didn’t improve, and the possibility of sovereign default was now real.
Two bailouts …show more content…

New resource sector capacities are coming online, and investment is incurring in areas outside the housing and mining sectors. This improvement in household incomes should continue to see consumer spending with improvements in wages expected to follow. The Federal Government are forecasting a budget surplus by 2020/21.
However, recent low interest rates have increased mortgage borrowing and subsequently seen a rise in house prices in many parts of the country. The potential risk here though is that many households may experience financial stress if house prices undergo large corrections.
Whilst there are downward pressures on growth in economies such as China, Japan and Korea, we are still likely to see growth at around the potential in East Asian countries with the advanced economies seeing growth above potential. The demand for steel in China is expected to be less than over the previous period. European growth is uneven throughout member countries, with minimal growth overall. The US economy is growing faster than expected, with unemployment expected to continue to drop.
Whilst there are signs of gradual improvement across the globe, this is occurring rather unevenly and is not without risk of decline. Companies should be aware of the risk for burst in the ‘housing bubble’ and the economic downturn that would follow. Australian and New Zealand exports rely heavily on the Asian market,

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