Global Financial Crisis And Emerging Powers

Global Financial Crisis & Emerging Powers
By Qazi Hussain Asghar

The current global financial crisis began in July 2007, when a loss of confidence by investors in the value of securitized mortgages in the United States resulted in a liquidity crisis that prompted a substantial injection of capital into financial markets by the United States Federal Reserve, Bank of England and the European Central Bank.

However, the 21st century has also witnessed the collective rise of emerging powers which marks an important progress in the evolution of international relations. This trend is transforming the power distribution among nations and adding new vitalities for international system during the period of peaceful transition. Against the background of the financial crisis and severe economic difficulties, emerging powers are integrating themselves internally, adjusting external relations and playing more vigorous and constructing roles in reforming process of the international system.

The biggest challenge of the current spread of the global financial crisis and economic difficulties on emerging powers is none other than economy. Since the second half of 2008, with the deepening and spread of the global financial crisis, emerging powers have faced increasingly severe challenges in economy, including the fall of export, the deep dips of stock market and the decline of economic growth.

According to the World Bank estimate published in December 2008, the growth rate of Russia, Brazil and India would reduce from 6%, 5.2% and 6.2% to 3%, 2.8% and 5.8% respectively. Secondly, the global financial crisis has evident impacts on Russia since September 2008, such as the price slump in oil and other natural resources, swift decline of stock market and bond market, continuously grievous losses in stock market, the heavy outflow of capitals and the shrinkage of foreign reserves.

Nevertheless, emerging powers have the capacities of turning “threat” into “opportunity”...