2008 turned out to be the most devastating year for world’s economy and as per some analysts, 2008 remained as the worst year in terms of economy after “Great Depression” of 1931.
Current year’s economic downfall was first sensed in United States when unemployment rate started growing enormously. In one year, unemployment rate broke previous 15 years’ records. In total 1.9 million Americans lost their jobs in 2008, furthermore, only in October 2008 unemployment reached 6.7 percent from 6.5 (Source: reported by American Labor Department).
Since early this year, financial institutes in America started feeling the crises ahead. Situation kept on worsening and resulted into closures of multiple defaulted financial institutes.
Despite September’s bailout plan of US$ 700 billion, out of which half has been utilized, has apparently not settled the economy as it was supposed to.
In a situation when countries like Germany and UK were suffering the economic crises consequences, third world countries like Pakistan were impacted the most. In Pakistan the current economic crisis was accompanied by several other blows including hiked oil prices, power and consumer goods’ shortage. This shortage, global demand and due to many other elements inflation kept on increasing and reached 35 percent mark.
There are some voices around that wheat shortage was somewhat more of planned, instead of natural causes, and that government’s mismanagement was the core reason behind the issue, but whatever the case was, Pakistani people were worst impacted this year. On one side we saw miles long queues in front of utility stores while on other hands we saw them demonstrating against dozen hours’ long load shedding.
Oil prices reached US$ 145 in global markets in 2008 consequently Petrol prices in Pakistan were seen at Rs. 87 per liter. Situation got better to some extent when oil prices reverted back to US$ 40. Similarly, Pakistanis were relieved with Rs. 9 reduction in oil prices in September. (Though we saw many petrol pumps closed due to this reduction and leaving the masses to demonstrate)
Stock exchanges in Pakistan were closed in August after several months of plunge and slow trading. Index that was 15,000 on February 18th dived down to 9,000 mark in August, where it was locked. Stocks were latter re-opened on December 15th, by Mr. Shaukat Tarin, Finance Minister – Pakistan, but we are witnessing the fall in index since then.
Other than stock market index, foreign exchange reserves were considered as mark of economic rise of Pakistan, however, foreign exchange reserves kept on dropping like stock exchange index. Foreign Exchange reserves have reached 6 billion dollar, which were once 13 billion dollar in January 2008. At this point of time (in December 2008) Pakistan was to return 4 billion dollars for loans, which meant that Pakistan was going to default very soon, however 3.5 billion dollar injection by IMF saved the country.
Year 2008 left us with largest ever financial scandal of Pakistan. In which Khanani & Kalia International (Pvt.) Ltd was found involved in illegally trading million of reserved to foreign countries.
We are about to conclude year 2008, but global economic impacts will be felt in 2009 too.