Seminar on Global Financial Recession: Causes, Consequences and Responses

DIU Auditorium │24 October 2009

Dr. Atiur Rahman, Governor, Bangladesh Bank has kindly consented to grace the occasion as the Chief Guest. 

Mr. Md. Sabur Khan, Chairman, Board of Governors, Daffodil International University will preside over the Inaugural Session of the Seminar.

Professor Dr. Aminul Islam, Vice Chancellor of Daffodil International University will preside over the Business Session of the Seminar.

Speech of Dr. Atiur Rahman

Global Financial Recession: Consequences and Responses
Dr. Atiur Rahman
Chief Guest

Back round:
The world economy has changed spectacularly since September 2008.A year has passed since the collapse of Lehman brothers –a watershed event for the world economy. The recession in many of the major industrial economies has already set several records. In the case of us, this recession is the longest since the great depression. The financial sector in the US, UK, and some euro zone countries remains fragile as many banks retain loan portfolios tainted with nonperforming assets –including toxic residential and commercial mortgage-backed securities.

Shortcomings in financial system regulation and supervisor regimes are now under intense scrutiny everywhere. Authorities across the world responded quickly and decisively to       threat of a potential replay of the great depression including steps to shore up the stumbling international financial system and restore confidence, opening wide the taps on money, supply boosting public spending plans and so on. Central banks and governments around the world have taken timely policy actions to prevent a complete collapse of the financial system and to provide stimulus to demand.

Impact on developing countries:
Developing counties-at first sheltered from the worst elements of the turmoil-are now much more vulnerable, with dwindling capital flows, huge withdrawals of capital leading to losses in equity markets, and skyrocketing interest rates. the crises

Present developing Asia with its most difficult economic challenges in recent times. Overall growth in developing Asia tumbled from its impressive peak of 9.5% in 2007 to 6.3% in 2008 and is further expected to decline in 2009(ADB forecasts at3.4% in 2009)

The longer or deeper the crises becomes, the greater the risks to the region’s finance sector. A delayed or disorderly resolution of the credit crisis in the developed countries could under time financial stability in developing Asia by further shaking investor confidence in financial system and instruments. Already the region is experiencing:

Radical cut back in external financing, key driver of economic expansion
Decline or slower growth in remittances which are damaging economic dependent on their overseas workers;

Slowing economic growth destroying jobs and driving down wages, consumption, and welfare of the developing countries. The International Lab our (ILO) has warned that this recession may add more than 30 million people to the unemployed by the end of 2009.

Women workers are likely to suffer the most as the crisis decimates jobs and markets them more vulnerable.

Impact on Bangladesh:
Financial markets and institutions in Bangladesh remained free of the toxic assets and contagion afflicting the global financial markets over the fast couple of years, because of the limited, regulated exposure to the global economy.

Economic growth in Bangladesh has thus far been only mildly impacted by the ongoing global slowdown, attaining 5.9 percent real GDP growth in FY 09 following the 6.2 percent growth in FY 08.
FY 09 growth in inflows