Common market can beat crisis, says economist
Amman, March 29, 2009
The countries of the region can stand up to the adverse effect of the crisis by establishing a common market, according to an international economist.
Dr Krishnamur Chandrasekar, professor of economics at New York Institute of Information Technology (NYIT) said that the proposal was highlighted by recent studies and recommended by GCC governments, which have been revisiting their financial, monetary and economic policies and working to accelerate the GCC economic integration project.
He was speaking at a lecture organised by NYIT at its premises in Amman.
He added that GCC governments have urged new feasibility studies into the present projects and those in the pipeline to ensure that they are safe from sudden collapse.
Dr Chandrasekar also outlined the major features of the global financial crisis and the structural changes expected in the world economy and their reflections on the Arab countries.
He warned against the repercussions of the global financial crisis on Arab countries, urging governments to take a sound and decisive approach to address such an outcome and deal with its present and future effects.
He explained that when the current crisis began, many governments tried to assure their peoples by insisting that they were isolated from the crisis and their economies were too strong to be affected by its consequences.
They thought at first, he added, that they were safe from the crisis whose shockwaves would not move beyond the White House. But in no time, the pace of the crisis quickened and banks, real estate agencies and stock brokerage firm began to collapse to adversely affect most markets and sectors, especially those most open to the US economy.
'The majority of the world countries have been affected by the crisis, including Arab countries, but at different degrees depending on their respective dependency on the US market, whether in terms of imports or exports,” said Dr Chandrasekar.
He added: 'At the regional level, the Gulf countries were the most impacted by the crisis and its consequences, which was also the case with all countries that invest in New York Stock Exchange.'
Professor Chandrasekar also reviewed the repercussions of global economic downturn and efforts made so far at the highest levels to ease its impact.
He noted that the origins of the crisis lie in the US housing bubble, which influenced the banking sector and mortgage securities, which cascaded ultimately in bank failure, leading to a state of no confidence and subsequent huge losses, credit crisis and shrinking liquidity levels.
Professor Chandrasekar said the crisis reflected deeply on the world and expanded to the various global markets and economic sectors, resulting in huge losses and turbulence, including the bankruptcy of several financial and investment firms, a trend that is still on the go.
In the meantime, international stock exchanges saw deteriorating indexes, recording unprecedented losses that are also subject to change with time.
To recover, the US market needs at least $2000 billion and three to five years, as the process is 'complicated and overlapping.'
He stressed that there is no way out of the crisis without substantial changes to the US economic system and its likes, which have for the past years gone too far from the state's regulatory role over economy.
NYIT Middle East president Mohammad Hussein said the visit by Professor Chandrasekar is part of the implementation of the university's strategies set by the higher management, which seeks further communication among administrative and academic staff in all branches.
'NYIT Jordan hosted Professor Chandrasekar to acquaint students with the actual dimensions of the global crisis which has resulted in economic slowness in almost all the world, which has not experienced such a recession in 90 years,