New regulations needed to avert fresh global crisis

The world must adopt new effective regulations to ensure the devastating 2008 global financial crisis would not be repeated despite the recovery of most countries, the Emirates Industrial Bank (EIB) has said.

Such regulations should be taken by both the industrial countries and developing nations, which are directly linked to the other parts of the world and are affected by any development, the government-controlled EIB said in its monthly economic bulletin.

“The “man-made” crisis of 2008-2009 seems to have been over in most of the world. While it impacted more the countries where it originated (advanced countries), the tremors were felt in the developing countries as well,” it said. “However, the impact on the latter was smaller and they were able to recover faster. The woes of the advanced countries still seem to be related to economic policy and regulation, as in the case of EU’s Euro crisis with respect to Greece. Competent and enlightened regulation would be needed to avoid such crisis in the future, not only in the developed but also in the developing world as they catch up with the developed world.”

EIB said growth rates worldwide this year suggest that the global economy has almost completely recovered from the 2008 distress.

Citing IMF data, it said the West Asian region, including the UAE, was ranked third after East Asia and South Asia in terms of growth rate. West Asia grew by 6.0 per cent in 2010 (compared to East Asia, 9.4 per cent and South Asia 7.2 per cent), and is projected to grow at 6.4 per cent in 2011.

“These growth rates seem to agree with the growth rate of the UAE economy in 2010. The UAE economy was able to completely weather the storm of 2008 -2009, both on the strength of healthy oil prices and a strong non-oil sector. In the oil exporting countries of this region, growth has been supported by expansionary government spending,” it said. “The continued global economic growth in 2011 seems to suggest that the world economy has almost completely out of the crisis it landed itself into during 2009 as triggered off by the financial crisis of 2008.“

It said 2009 was an exceptionally bad year for the global economy when there was a rare, unprecedented negative growth for the first time since the Second World War, which turned out to be more than earlier estimated, viz. - 2.1 per cent according to UNCTAD compared to the initial estimates -0.8 per cent by IMF.

In 2010 there was a robust recovery according to the calculations of this UN organisation, with a 3.9 per cent growth in the global economy. “This growth is projected to have continued into 2011 with a projected

estimate of 3.1 per cent growth.”

Follow Emirates 24|7 on Google News.