GLOBAL FINANCIAL CRISIS SINCE
“GREAT DEPRESSION TO SUB-PRIME
CRISIS”
INTRODUCTION
Financial crisis is a situations in which some financial institutions or assets
suddenly lose a large part of their nominal value or simply its value drops rapidly.
The crisis can cause the economy to go into a recession or depression.
The world has witnessed several financial crises in the past few decades,
such as the OPEC oil crises of the 1970’s, the United States Savings and loan
crisis of the 1980’s, the prolonged economic downturn in the Japanese economy
in the 1990’s, the Asian financial crisis in the later part of the 1990’s, and the
problems following the crash of the dot com bubble in the early part of the last
decade. Each of these events had been accompanied by shocks to the economies
of one or more markets or regions and it took several years of concerted economic
and regulatory policy adjustments for the affected markets to return to stability.
While it is normal for financial crises to occur frequently and the affected
economies to recover subsequently, it nevertheless results in economic losses for
the countries involved and for the people, businesses and institutions in those
countries.
The Global Financial Crisis, which started in 2008, is the latest in the series
of economic crises to adversely impact world economies. Unlike the past few
crises, the current crisis has not spared any of the countries or market sectors, and
has devastated economies that were traditionally strong. While the world is
slowly seeing an end to the crisis, it is widely acknowledged that among the
financial crisis of the past hundred years, only the Great Depression of the 1930’s
had a more severe and protracted effect on the world economy compared to the
current economic upheaval. What started as an excessively loose monetary policy
in the 1990’s in major developed economies transformed into global imbalances
and a full-blown financial and economic crisis for all the economies of the world.
Problems that were first noticed in the US subprime mortgage market quickly
spilled over into the real estate and banking. The Indian economy is experiencing
a downturn after a long spell of growth. Industrial growth is faltering, the current
account deficit is widening, foreign exchange reserves are depleting, and the
rupee is depreciating.
The crisis originated in the United States but the Indian government had
reasons to worry because there was a potential adverse impact of the crisis on the
Indian banks. Lehman Brothers and Merrill Lynch had invested a substantial
amount in Indian banks, who in turn had invested the money in derivatives,
leading to exposure of even the derivatives market to these investment bankers.
Public Sector Unit (PSU) banks of India like Bank of Baroda had significant
exposure towards derivatives. ICICI faced the worst hit. With Lehman Brothers
having filed for bankruptcy in the US, ICICI (India’s largest private bank),
survived a rumour during the crisis which argued that the giant bank was slated
to lose $80 million (Rs.375 crores), invested in Lehman’s bonds through the
bank’s UK subsidiary. Even Axis Bank was affected by the meltdown. The real
estate sector in India was also affected due to Lehman Brothers real estate partner
having given Rs.7.40 crores to Unitech Ltd., for its mixed use development
project Santa Cruz. Lehman had also signed a MOU with Peninsula Land Ltd, an
Ashok Priamal real estate company, o fund the latter’s project amounting to
Rs.576 crores. DLF Assets, which holds an investment worth $200 million, is
another major real estate organization whose valuations are affected by the
Lehman Brothers dissolution.
Background Information of the Crisis
A disorderly contraction in wealth and money supply in the market is the basic
cause of a financial crisis, also known as a credit crunch. The participants in an
economy lose confidence in having loans repaid by debtors, leading them to limit
further loans as well as recall existing loans.
Credit creation is the lifeblood of the financial/banking system. Credit is
created when debtors spend the money and which in turn is banked and loan to
other debtors. Due to this, a small contraction in lending can lead to a dramatic
contraction in money supply.
The present global meltdown is a culmination of several factors, the most
important being irrational and unsustainable consumption in the West particularly
in US disapportionate to its income by consistent borrowings fueled by savings
and surpluses of the East particularly by China and Japan.
The second important factor is the greed of the investment bankers who
induced housing loans by uncontrolled leveraging on an optical illusion of
increasing prices in the housing sector.
The third important factor is the failure of the regulating agencies who ignored
the warning signals arising out of the ballooning debts, derivatives on the
assumption that the Collateral Debt Obligation (CDO), the Credit Default
Swapping (CDS) and Mortgaged Backed Securities (MBS) would continue to
remain safe with the mortgage guarantees provided by Government Sponsored
Enterprises (GSE) namely Fannie Mae and Freddie Mac which had enjoyed the
political patronage since inception.
There are other several factors including shadow banking system, financial
leveraging by the investment bankers and lack of adequate disclosures in the
financial statements leading to fallacious ratings by the rating agencies.
The global financial crisis is the unwindling of the debt bubbles between
2007 and 2009. On December 1, 2008, the National Bureau of Economic
Research (NBER) officially declared that the US economy had entered recession
in December 2007. The financial crisis has moved into a Industrial crisis now as
countries are sharing results in their manufacturing and services sectors.
CAUSES AND CONSEQUENCES OF FINANCIAL CRISIS
1. Strategic complementaries in financial markets
In many cases investors have incentives to coordinate their choices.Economists
call an incentive to mimic the strategies of others strategic complementarity. It
has been argued that if people or firms have a sufficiently strong incentive to do
the same thing they expect others to do, then self-fulfilling prophecies may occur.
For example, if investors expect the value of the yen to rise, this may cause its
value to rise; if depositors expect a bank to fail this may cause it to fail. Therefore,
financial crisis are sometimes viewed as a vicious circle are in which investors
shun some institution or asset because they expect others to do so.
1. Leverage
Leverage, which means borrowing from finance investments, is frequently cited
as a contributor to financial crisis. When a financial institution (or an individual)
only invests its own money, it can, in the very worst case, lose its own money.
But when it borrows in order to invest more, it can potentially earn more from its
investments, but it can also lose more than all it has. Therefore leverage magnifies
the potentaila returns from investment, but also creates a risk of bankruptcy. Since
bankruptcy means that a firm fails to honor all its promised payments to other
firms, it may spread financial troubles from one firm to another.
2. Asset- liability mismatch
It is a situation in which the risks associted with an institution’s debts and assets
are not appropriately aligned. For example, commercial banks offer deposit
accounts which can be withdrawn at anytime and they use the proceeds to make
long-term loans to businesses and home owners. The mismatch between the
bank’s short-term liabilities (its deposists) and its long-term assets (its loans) is
seen as one of the reasons bank runs occur (when depositors panic and decide to
withdraw their funds more quickly than the bank can get back the proceeds of its
loans).
3. Uncertainity and herd behaviour
Many analyses of financial crises emphasize the role of investment mistakes
caused by lack of knowledge or the imperfections of human reasoning. If the first
investors in a new class of assets profit from rising asset values as other investors
learn about the innovation then still more others may follow their example,
driviong the price even higher as they rush to buy in hopes of similar profits. If
such “herd behaviour”causes prices to spiral up far above the true value of the
assets, a crash may become inevitable. If for any reason the price briefly falls, so
that investors realize that further gains are not assured, then the spiral may go into
reverse, with price decreases causing a rush of sales, reinforcing the decrease in
prices.
4. Regulatory failures
Governments attempts to eliminates or mitigate financial crisis by regualting the
financial sector. One major goal of regulation is transparency. Another goal of
regulation is making sure institutions have sufficient assets to meet their
contractual obligations, through reserve requirements, capital requirrements, and
other limits on leverage. Some financial crises have been balmed on insufficient
regulation, and have led to change in regualtion in order to avoid a repeat.
However, excessive regualtion has also been cited as a possible cause of financial
crises. International regulatory convergence has been interpreted in terms of
regulatory herding, depending market herding and so increasing systeic risk.
From this perspective, maintaining diverse regulatory regimes would be a
safeguard.
5. Contagion
The likelihood that significant economic changes in one country will spread to
other countries. Contagion can refer to the spreads of either economic booms or
economic crises throughout a geographic region. Contagion refers to the idea that
financial crises may spread from one institution to another, as when a bank run
spreads from a few banks to many others, or from one country to another, as when
currency crises, sovereign defaults, or stock market crashes spread across
countries. When the failure of one particular financial institution threatens the
stability of many other institutions, this is called systemic risk.
6. Recessionary effects
Many factors contribute to an economy’s fall into a recession, but the major cause
is inflation. In an inflationary environment, people tend to cut out leisure
spending, reduce overall spending and begin to save more. But as individuals and
businesses curtail expenditures in an effort to trim costs, this causes GDP to
decline. Unemployment rates rise because companies lay off workers to cut costs.
It is these combined factors that cause the economy to fall into a recession.
TYPES OF FINANCIAL CRISIS
1. Banking Crisis
When a bank suffers a sudden rush of withdrawals by depositors, this is called
a bank run. Since banks lend out most of the cash they receive in deposits, it is
difficult for them to quickly pay back all deposits if these are suddenly
demanded, so a run may leave the bank in bankruptcy, causing many depositors
to lose their savings unless they are covered by deposit insurance.
A situation in which bank runs are widespread is called a systemic banking
crisis or just a banking panic. A situation without widespread bank runs, but in
which banks are reluctant to lend, because they worry that they have
insufficient funds available, is often called a credit crunch. In this way, the
banks become an accelerator of a financial crisis.
Examples of bank runs include the run on the Bank of the United States in 1931
and the run on Northern Rock in 2007. The collapse of Bear Stearns in 2008
has also sometimes been called a bank run, even though Bear Stearns was an
investment bank rather than a commercial bank. The U.S. savings and loan
crisis of the 1980s led to a credit crunch which is seen as a major factor in the
U.S. recession of 1990-91.
2. Speculative bubbles and crashes
A financial asset like stock shows a bubble when its price exceeds the present
value of the future income (such as interest or dividends) that would be
received by owning it to maturity. If most market participants buy the asset
primarily in hopes of selling it later at a higher price, instead of buying it for
the income it will generate, this could be evidence that a bubble is present.
If there is a bubble, there is also a risk of a crash in asset prices: market
participants will go on buying only as long as they expect others to buy, and
when many decide to sell the price will fall. However, it is difficult to tell in
practice whether an asset’s price actually equals its fundamental value, so it is
hard to detect bubbles reliably.
Examples:
Well-known examples of bubbles and crashes in stock prices and other asset
prices include the Dutch tulip mania, the Wall Street Crash of 1929, the
Japanese property bubble of the 1980s, the crash of the dot-com bubble in
2000-2001, and the now-deflating United States housing bubble, known as
sub- prime crisis.
3. International financial crises
When a country maintains a fixed exchange rate and is suddenly forced to
devalue its currency because of a speculative attack, this is called a currency
crisis or balance of payments crisis. When a country fails to pay back its
sovereign debt, this is called a sovereign default.
While devaluation and default could both be voluntary decisions of the
government, they are often perceived to be the involuntary results of a change
in investor sentiment that leads to a sudden stop in capital inflows or a sudden
increase in capital flight.
Several currencies, part of the European Exchange Rate Mechanism suffered
crises in 1992-93 and were forced to devalue or withdraw from the mechanism.
Another round of currency crisis took place in Asian Crisis during 1997-98.
Many Latin American countries defaulted on their debt in the early 1980s. The
1998 Russian financial crisis resulted in a devaluation of the ruble and default
on Russian government bonds.
4. Wider economic crises
Negative GDP growth lasting two or more quarters is called a
recession. An especially prolonged recession may be called a
depression, while a long period of slow but not necessarily negative
growth is sometimes called economic stagnation.
Since these phenomena affect much more than the financial system,
they are not usually considered financial crises per se. But some
economists have argued that many recessions have been caused in
large part by financial crises.
One important example is the Great Depression, which was preceded
in many countries by bank runs and stock market crashes. The
subprime mortgage crisis and the bursting of other real estate bubbles
around the world have led to recession in the U.S. and a number of
other countries in late 2008 and 2009.
REASONS OF FINANCIAL CRISIS
The reasons for the crisis are varied and complex. Some of them include boom in
the
Housing market
Speculation
High-risk mortgage loans and lending practices
Securitization practices
Inaccurate credit ratings
Poor regulation
Boom in the Housing Market
Subprime borrowing was a major contributor to an increase in house ownership
rates and the demand for housing. His demand helped fuel housing price increase
and consumer spending. Some house owners used the increased property value
experienced in housing bubble to re-finance their homes with lower interest rates
and take second mortgages against the added value to use the funds for consumer
spending. Increase in house purchase during the boom period eventually led to
surplus inventory of houses, causing house prices to decline, beginning in the
summary of 2006. Easy credit, combined with the assumption that housing prices
would continue to appreciate, had encouraged many subprime borrowers to
obtain adjustable-rate mortgages which they could not afford after the initial
incentive period. Once housing prices started depreciating moderately in many
parts of the U.S, re-financing became more difficult. Some house owners were
unable to re-finance their loans reset to higher interest rates and payment
amounts. Excess supply of house placed significant downward pressure on prices.
As prices declined, more house owners were at risk of default and foreclosure.
Speculation
Speculation in real estate was a contributing factor. During 2006, 22 percent of
houses purchased (1.65 million units)were for investment purposes with an
additional 14 percent (1.07 million units purchased as vacation homes. In other
words, nearly 40 percent of house purchases were not primary residencies,
Speculators left the market in 2006, which caused investment sales to fall much
faster than the primary market.
High- Risk Mortgage Loans and Lending Practices
A variety of factors caused lenders to offer higher-risk loans to higher- risk
borrowers. The risk premium required by lenders to offer a subprime loan
declined. In addition to considering high- risk borrowers, lenders have offered
increasingly high-risk loan options and incentives. These high-risk loans include
“No Income, No Job and No Assets loans”. It is criticized that mortgage
underwriting practices including automated loan approvals were not subjected to
appropriate review and documentation.
Securitization Practices
Securitization of housing loans for people with poor credit-not the loans
themselves-is also a reason behind the current global credit crisis. Securitization
s a structured finance process in which assets, receivables or financial instruments
are acquired, pooled together as collateral for the third party investments
(Investments Banks). Due to securitization, investor appetite for mortgage backed
securities(MBS), and the tendency of rating agencies to assign investment-grade
ratings to MBS, loans with a high risk of default could be originated, packaged
and the risk readily transferred to others.
Inaccurate Credit Ratings
Credit rating process was faulty. High ratings given by credit rating agencies
encouraged the flow of investor funds into mortgage-backed securities helping
finance the housing boom. Risk rating agencies were unable to give proper ratings
to complex instruments. Several products and financial institutions, including
hedge funds, and rating agencies are largely if not completely unregulated.
Poor Regulation
The problem has occurred during an extremely accelerated process of financial
innovation n market segments that were poorly or ambiguously regulated-mainly
in the U.S. The fall of the financial institution is a reflection of the tax internal
controls and the ineffectiveness of regulatory oversight in the context of a large-
volume of non-transparent assets. It is indeed amazing that there were simply no
checks and balances in the financial system to prevent such a crisis and “not one
of the so called pundits” in the field has sounded a word of caution. There are
doubts whether the operations of derivatives markets have been as transparent as
they should have been or if they have been manipulated.
IMPACT OF FINANCIAL CRISIS
Impact on India
India could not insulate itself from the adverse developments in the international
financial markets, despite having a banking and financial system that had little to
do with investments in sub-prime mortgages, whose failure had set off the chain
of events causes global crisis. Economic growth decelerated in 2008-09 to 6.7%.
This represented a decline of 2.1% from the average growth rate of 8.8% in the
previous five years
Impact on Real Estate
In India one of the crisis is the real estate. The crisis will hit the Indian real estate
sector hard. The sector is witnessing a slump in demand because of the global
economic slowdown. The recession has forced the real estate players to restrict
their expansion plans. Many on-going real estate projects are suffering due to lack
of capital investment from foreign investors.
Impact on Stock Market
The financial crises affected the stock markets even in India, prospect of
economic slowdown have pulled down the stocks market. Foreign institutional
investors pulled near around $11 billion from India, dragging the capital market
down with it. Stock prices have fallen by 60%. India’s stock market index Sensex
touched above 21,000 mark in the month of January 2008 and has plunged below
10,000 during October 2008.
Impact on India’s Export
With the US and several European countries slipping under the full blown
recession, Indian exports ran into difficult times, since October. Manufacturing
sectors like leather, textile, gems and jewellery have been hit hard because of the
slump in the demand in US and Europe. When the impact of declining consumer
demand in the US and the other major global market, with negative growth for
the second month, running and widening monthly trade deficit over $10 billions.
Impact on India’s Handloom Sector, Jewellery Export and
Tourism
Reduction in demand in the OECD ( Organization for Economic Cooperation and
Development) countries affected the Indian gems and jewellery industry,
handloom and tourism sectors. Around 50,000 artisans employed in jewellery
industry lost their jobs as a result of the global economic meltdowns. Further, the
crisis, had affected the Rs.3000 crores handloom industry and volume of
handloom exports dropped by 4.6% in 2007-08, creating widespread
unemployment in this sector. Indian tourism sector was also badly affected as the
number of tourist flowing from Europe and USA has decreased sharply.
Opportunities arisen from Global Crisis
The unfolding global economic crisis came in various forms and presented many
challenges but these also brought opportunities. The extent to which the
challenges engendered by the crisis can be converted into opportunities by the
country so this has given chance to developing countries to mature in various
dimensions. The international system and concept of power also undergone a shift
and had serious repercussion on developing countries and develop more
responsibilities for global economic and financial stability.
Competitive Global Markets
Against the impact on international business and declining in the exports has
demanded a change from the Indian policymakers to maintain the domestic
demand work towards gaining investor’s confidence. The Indian government has
option to explore other ASEAN countries rather solely depending on the
developed countries Europe and US with keeping incentive for exporters to be
competitive globally. For this strong governance reforms are required from
government to improve overall competitiveness of the Indian economy.
Food Grain led Growth
The government put more emphasis on enlarging governance expenditure for the
developments and growth on new speculative bubbles that caused global financial
crisis. This put focus on agricultural sector and production of food that directly
improves the livelihoods of the people engaged in particular sector. The new
paradigm requires food grain-led growth strategy on the basis of peasant
agriculture sustained through larger government spending towards the agriculture
and rural sector, which can simultaneously remove both recession and food crisis
in India.
Stand in Global Economic Agenda
With the global financial turmoil the emerging markets have got the prominent
stand ion global economic agenda. The policy choices made by the emerging
countries India and China has made their role active internationally on key policy
issues and strengthening global economic governance for their long-term interest
to take lead on global challenges.
Strategic Industrial Advantage
At the time of crisis when the automobile companies in US were facing recession
and received public funds from government to overcome their shortcomings. In
the same phase emerging country like India has got the competitive advantage
over the industries of developed country in terms of operating condition, novel
market segments, dynamic market shifts, valuable learning opportunities and
enhanced indigenous competition. In structural terms the growth of business
capabilities available through market transactions provides international
businesses with an increasing range of options in terms of where value is added
and whether this is managed under common ownership or contracted externally.
These increased strategic and structural options are likely to play an increasingly
important role in future competitive adaption.
Retail Sector Development
Countries throughout Asia and specially India were well positioned for an early
recovery from the economic crisis as domestic demand is holding up well, GDP
growth continued and trillions of dollars of sovereign reserves were providing
governments and state banks with tools for action. The global recession has made
acquisition valuations of many local- market retailers very attractive. Unlike most
developed markets, GDP in emerging ,markets is expected to continue to grow,
albeit a slower rate, and population in many countries are younger, increasingly
urban and showing a growing interest in modern retail formats. Asian countries
continued to transform their economies with domestic consumption as a primary
focus a trend that should favour continued growth in retail business also over the
long term.
Opportunities for India’s IT Sector
1. Make the growth vs. profitability trade-off early on during the slowdown:
profitability levers are still available if growth is sacrificed when required,
and managed well.
2. Utilize some of the unavoidable fixed costs for implementing investment
ideas that have been on the backburner and could not be done away with
due to high utilization.
3. M&A opportunities exist in the US, both in financial sector and non-
financial sector.
4. Intellectual Property (IP) and product related investments in the US should
be assessed and made.
5. Operational efficiencies can be adhered to especially in an attractive labour
market and an environment of budget spend/uncertainty.
India's Policy Response to the Crisis
The various monetary and fiscal policy initiatives implemented by the Indian
government and its agencies in response to the global financial crisis and its
effects on the domestic economy. In its role as the principal regulator of the
financial markets in India, the primary responsibility of the Reserve Bank of India
(RBI) is to ensure the orderly functioning of the credit and foreign exchange
markets in India. The monetary policy response of the RBI was aimed at
containing the contagion effects of the financial crisis from the advanced
economies by ensuring sufficient liquidity in the credit markets. On the fiscal
side, the government's policy responses were aimed at protecting businesses and
groups that were directly affected by the crisis. This was accomplished through
relaxation of some onerous restrictions, tax subsidies and strengthening of social
safety-nets.
1. Monetary Policy Responses
The goals of the monetary policy initiatives were three-fold: to provide
sufficient liquidity in the domestic market, to provide dollar liquidity for
businesses financing in the external markets, and to ensure flow of credit to
those industry sectors that were productive. Following the rapid expansion in
the first half of the decade, the monetary policy was tightened in the second
half. This policy had been in place till August 2008 when the initial effects of
the crisis started impacting India in the form of reduced credit availability.
Banks became cautious and started cutting back on their new loan offerings.
To provide more liquidity to the credit markets, the RBI gradually reduced the
repo rate from 9% (in August 2008) to 4.75%, and the reverse repo rate from
6% to 3.25%.
To facilitate availability of sufficient dollar liquidity, the RBI intervened in
the foreign exchange markets to support the Indian Rupee. In the process, the
foreign reserves held by India declined from US$ 309.7 billion in 2007-08 to
US$ 252 billion in 2008-09. The rising dollar had been increasing the debt
service costs for businesses that had been using external financing. By
stabilizing the value of the Indian Rupee, RBI was attempting to manage the
exchange rate risks by the borrowers. Further, it initiated currency swaps with
businesses that were exposed to United States dollar payables, and extended
export credit finance to them. With the limited availability of United States
dollar funding in external markets and increased risk aversion on the part of
lenders, ceilings on rates at which businesses could borrow in external markets
were relaxed. Finally, the rates on Eurodollar deposits in India were raised to
attract more funds from foreign individual investors.
The RBI, in conjunction with the government, implemented policies that
provided additional credit facilities specifically for Small and Medium
Enterprises (SMEs) that were particularly affected by the non-availability of
credit. Banks were allowed to reclassify certain nonperforming assets in a way
that allowed them to refinance borrowers who were behind in their debt
service payments. A bailout package was implemented in the agriculture
sector in the form of a farm-loan waiver that allowed farmers to continue
operations facing a mounting debt burden.
2. Fiscal Policy Responses
The focus of the fiscal policy responses of the Indian government to the
financial crisis was to stimulate demand for the country's output and to bailout
those industries and groups that were most vulnerable to the crisis. Starting in
December 2008, the government introduced three stimulus packages in the
span of four months that lowered tax rates and increased tax subsidies,
increased capital expenditures and government spending, and provided
incentives that encouraged growth in consumption and demand. Specifically,
the government announced plans for additional public spending in capital
expenditure projects, provided government guarantees for infrastructure
spending, and expanded credit for SMEs and exporters. The agriculture
industry, which supports a majority of the population, was particularly
affected due to rising oil and fertilizer prices, and due to failed monsoons. The
loans that were in default in the farming sector were waived by the
government. The stimulus packages also included tax rebates and subsidies
for some of the affected sectors of the market. Finally, a revised pay structure
for all government employees implemented salary increases that raised the
disposable income for a significant part of the labor force. It is estimated that
the size of the fiscal stimulus amounted to about 3% of the GDP.
CONCLUSION
Recent economic history has taught us that financial crises that simultaneously
affect several economies occur frequently, and that prudent policies and
appropriate responses by monetary authorities help in managing the crises.
However, the task of containing the adverse effects becomes more challenging
when all the economies of the world are affected by the crisis. The current
global financial crisis, which started in 2008, has been adversely affecting all
the world economies and the magnitude of its impact is exceeded only by that
of the Great Depression of 1930s. In response to the crisis, the various national
monetary authorities and international financial organizations have
implemented fiscal and monetary policy initiatives to alleviate the problems
and soften the impact on the affected sectors. While all economies were
adversely affected by the crisis, the impacts were not uniform across The
global financial crisis has had a more severe impact on the advanced
economies compared to the rest of the world. The economic indicators in the
United States and the European Union countries point to a severe contraction
in these markets. At the same time, the slowdown in the emerging markets has
been smaller. Within the emerging markets, countries such as India, China and
Brazil have even managed to expand during the crisis, albeit at a lower rate
compared to their growth prior to the crisis. They have also successfully
avoided a protracted slowdown and are projected to achieve higher growth
rates. This paper detailed the impacts of the global financial crisis on the
Indian economy, and the responses of the Indian government in managing the
crisis. The proactive policies of the RBI have ensured the availability of
adequate liquidity in the markets. In the credit and consumer markets, interest
rates and inflation rates have stabilized. In the foreign exchange market, the
Indian Rupee has rebounded against currencies of the major trading partners.
The fiscal stimulus provided by the government has helped cushion the decline
in private investment and consumption in the real sector. Although
preliminary estimates of the nonperforming assets of banks have been rising,
they are still at manageable levels.
References
https://www.cland.k12.ky.us
http://www.ase.tufts.edu
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