The emerging nations particularly Brazil, Russia, India, China are a harried lot these days. No longer immune from the crippling effects of the credit crisis and the consequent global slowdown, these economies are finding it hard to sustain their growth momentum of the past. The Asian region as a whole is finding itself in troubled waters. Given that the Asian countrie's population is younger than its developed counterparts and the labour force is growing more quickly, they therefore need to grow at a faster rate to absorb the workforce. Therefore, if the growth engine of these economies starts to slow down, unemployment and poverty will increase.
Asian economies are facing problems on various fronts. The major one being that the growth of exports will be curtailed as the US and Europe slows down. Further, their net imports of capital will also shrink forcing countries that live beyond their means to cut back on spending. Each of the emerging economies have their own set of problems.
Asian economies are facing problems on various fronts. The major one being that the growth of exports will be curtailed as the US and Europe slows down. Further, their net imports of capital will also shrink forcing countries that live beyond their means to cut back on spending. Each of the emerging economies have their own set of problems.
Take India for instance. India has the largest current-account deficit, which widened in the second quarter. While most of it was covered by foreign direct investment, the heavy reliance of many Indian companies on foreign currency borrowings means that the cost of borrowing has become all the more expensive. Add to this the sharp depreciation of the rupee against the dollar and many companies have had considerable forex losses on their books this quarter.
While Russia has surplus on its current account due to oil and gas exports, the overseas liabilities of the Russian banks far exceed their net foreign assets. Brazil’s heavy reliance on commodity exports, is also at the receiving end as the prices of commodities are cooling down.
But hang on! All is not lost. The silver lining in the cloud for Asian nations is the fact that they tend to save more than their developed counterparts and this will ensure that they do not witness the same fate that befell the people of the US and Europe, who have been used to living beyond their means.
While Russia has surplus on its current account due to oil and gas exports, the overseas liabilities of the Russian banks far exceed their net foreign assets. Brazil’s heavy reliance on commodity exports, is also at the receiving end as the prices of commodities are cooling down.
But hang on! All is not lost. The silver lining in the cloud for Asian nations is the fact that they tend to save more than their developed counterparts and this will ensure that they do not witness the same fate that befell the people of the US and Europe, who have been used to living beyond their means.
People over there have got used to the so called " HIGH STANDARD OF LIVING"..thanks to the simple Indian culture. Study shows that on an average an American who spends 10000 dollars today pays 2000dollars by the end of the year and remaining after 5 yeras. And we fell sad that we live in India. Is it for this purpose?? Cant a person understand what simple economics is all about? Can't he understand that our habit of saving is better than theirs? Our culture has made us handle crises situation in the most effective manner.
As Gandhiji rightly said,"Simple living, high Thinking" has to apopted in the western countries as well. At this point of time we are a bit paniky, but WE ARE IN A BETTER SITUATION THAN THEIRS!!!! then WHY DO WE FEAR?????????????
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