The Effect of the Financial Crisis on the Egyptian Market

Topics: Monetary policy, Recession, Inflation Pages: 9 (1583 words) Published: January 3, 2013

By: Mohamed Yasser Osama Ghallab

To: Dr. Ahmed Ghoneim

19 June 2011-06-19


a. Chapter 1: introduction:
a. What is recession
b. What is the reasons of the US financial crisis 2008 b. Chapter 2: the world effect
a. How did the financial crisis affect the whole world b. Why did the financial crisis affect the world
c. Chapter 3: The Egyptian economy before the financial crisis a. the economy before
b. GDP before
c. Inflation
d. Unemployment
e. Net exports
d. Chapter 4: The Egyptian economy after the financial crisis a. the economy after
b. GDP before
c. Inflation
d. Unemployment
e. Net exports
e. Chapter 5: How can any Country make corrective actions a. Monetary policies
b. Fiscal policies
c. The correction actions taken by the Egyptian Government and the Central bank f. Chapter 6: Conclusion
a. Where they good or bad, and what would had they done to be better b. lessons learnt from this experience

Chapter 1: Introduction:

a. What is rescission?

Recession is by definition the decrease in production for a certain economy for a certain period of time, either a quarter or a year

“Production, as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits, and inflation all fall during recessions, while bankruptcies and the unemployment rate rise.” 1

Recessions generally occur when there is a high drop in spending and usually following excess supply and decrease in demand, causing supply shock or the bursting of an economic bubble.

This phenomenon can be easily understood from the previous demand and supply graph

When the Supply increases dramatically, and the demand decreases dramatically, this is exactly when the Financial crisis and the recession

Excess Supply+ Low Demand ( Recession

As it’s clear from the previous graph, that in the recessions, prices decreases while they find no one to buy it, this causes firms to do the following:

1- Stop or decrease production

2- Lay off employees

3- Decrease salaries

The above three causes the whole economy to stop and the growth to stop or be in negative

b. What is the reasons of the US financial crisis 2008

“The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.7 trillion in 2010, approximately a quarter of nominal global GDP.

Its GDP at purchasing power parity was also the largest in the world, approximately a fifth of global GDP at purchasing power parity.

The U.S. economy also maintains a very high level of output per capita. In 2009, it was estimated to have a per capita GDP (PPP) of $46,381, the 6th highest in the world.”

As the USA have such size in of economy , and it’s the largets trading nation in the world, its contribution across the world’s economic status of contraction and expansion is very high , especially for the three largest trading partners Canada, China and Mexico.

According to economists, since 1854, the U.S. has encountered 32 cycles of expansions and contractions, with an average of 17 months of contraction and 38 months of expansion.

However, since 1980 there have been only eight periods of negative economic growth over more than a quarter , and the periods of contractions are

July 1981 – November 1982: 14 months
July 1990 – March 1991: 8 months
March 2001 – November 2001: 8 months
December 2007 – June 2009: 18 months

The scope in the is document is to discuss the last contraction period December 2007- June 2009

Before the Financial crisis

The USA financial prices didn’t just occure in a night, it...
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