1. Global Crisis in an Integrated Region Context
George P. Zanias
Athens University of Economics
and Business

2. Outline Global crisis: the roots
Financial, economic and employment crisis
The Global impact
The transmission to the region
The regional impact
The policy responses

3. Global Crisis: the Roots
Financial System: a mean to an end. But...
Greedy Bankers
Complacent regulators
Global economic imbalances
Hyper-consumption and twin deficits in the US
Large savings in BRIC, Emirates, Japan
Huge current account deficits in emerging markets

4. Global Crisis: the Roots
…and the ignition: US subprime market
…following up from: food and fuel crisis

5. Implications for the Real Economy
Bank Liquidity
Access to credit
Cost of credit
Uncertainty
Consumption
Investment
Savings
Employment
Unemployment
Savings
Demand
Output

6. Global Impact: Growth Projections

7. Global Impact: Industrial Production and Trade Projections

8. The transmission to the Region
Through Uncertainty
Through trade, the banking system, FDI
Open door trade policies and contraction of export markets
Reliance on foreign banks who reduced/cut lending to local subsidiaries
Reduced volumes of FDI

9. Western Banks in Eastern Europe

10. BSEC: Current Account Deficits (% GDP)

11. Regional Impact: Financial markets

12. Regional Impact: EU and Emerging Economies (EC + EBRD forecasts)

13. Regional (BSEC) Growth Forecasts (EBRD, Greece: EC)

14. Policy Responses Cleaning banks (toxic assets, liquidity)
Monetary policy (lower interest rates)
Fiscal policy (demand stimulus packages)
Employment and SME policies
Safety net (social policy, precautionary savings)

15. But: One size does NOT fit all (The regional context)
Heavy dependence on foreign banks
Interest rate support for currencies
Heavy dependence on FDI
New protectionism (credit and trade)
Lack of means for stimulus packages and larger informal sector in crisis situation

16. …and some advantages Possible benefits from foreign stimulus packages
Higher activity by IFIs
Access to cheaper funds
Investment projects to boost demand
SME packages

17. Regional level response
Avoid protectionist measures
Coordinate possible financial and fiscal policies
BSTD Bank initiatives

18. Thank you