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Debt Crisis Strikes an All Time World Record

By Edited Jan 23, 2016 0 0

Debt(65818)
Credit: renjith krishnan

This decade past had brought about changes which had posted challenges to the global economy in general. The second half of the decade made everyone from highly developed countries to third world nations share the same struggle in a declining economic situation. In fact, a major financial debt crisis had plagued the world from industrialized nations to poor countries during the most recent three years past. Aside from debt, the global recession had caused major setbacks in the economy of many countries. These include deficits, deflation, and other economic issues such as downturns and downgrades as most European business websites call it.

Debt Crisis  and Deficits

Deficits are further described as an ill proportioned scale between expenses and gains. Expenditures and other costs related to production and manufacture are relatively higher than the revenue gained. This is due to a decline in the purchasing power of consumers and a forced decrease in prices of goods made. In order to cover up such losses, companies have turned to financial institutions for immediate relief. Here, deficit creates a byproduct of debt.

Deficits in Major Countries

Deficits and debt problems had been recorded even in giant corporations. Based on statistics, European countries Sweden and Finland experienced the highest recorded deficit during the recession period. The former showed 15.4 percentage deficits while the latter showed 11.8 percent. Other nations which had showed remarkable deficit due to the financial crisis also include Argentina, Japan, Chile, Norway, Malaysia, Indonesia, Thailand, Korea, Colombia, and Mexico. As per records, these nations have experienced the impact of a global financial crisis under these rates: 9.5., 9.4, 8.0, 7.9, 6.5, 5.8, 5.8, 4.8, 3.8, and 2.6, respectively.

Debt Crisis and Deflation

The global financial debt crisis had also caused deflation. In relation to deficit, when consumers do not have the capacity to purchase offered products, deflation occurs. Companies are forced to lower product prices in the hope of generating sales rather than not getting anything sold at all.

Debt Crisis and Downturns

Downturns which had lasted for years were predominant in banking and finance, the employment sector, and real estate particularly housing projects. The economic crisis had triggered a downturn in the banking and finance world especially in Austria, Hungary, Iceland, Ireland, Spain, and the United Kingdom.

Debt Crisis and Unemployment

Unemployment is a common denominator too for many nations. According to researches, the rate of unemployment increased to at least 7% over the past five years alone. With the financial economic crisis causing deficits in company revenues, there are less employment opportunities to accommodate job seekers.

Debt Crisis' Effect on Real Estate

The impact of this global financial crisis had not spared even the toughest assets such as housing projects and other real estate properties. The largest fall in terms of real estate downturns were seen in countries like Finland, Philippines, Colombia and Hong Kong. These experienced a decline of more than 50%.

Hope amidst the Debt Crisis

The financial debt crisis had never been greater during the past decade. Recent improvements however, had been seen particularly at the end of 2010 towards the beginning of 2011 specially for real estate.  There were also improvements seen in other sectors. Although most of these are trivial, they are still important in building everyone’s hopes up for a more improved global economic and financial status in the coming decade.

Related Article:

Understanding Causes of the Debt Crisis

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