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The financial crisis that hit the illusory or parallel market has now started to impact the real economy,  which is the most serious stage - Abu-Ghazaleh

AMMAN --- MARCH 10, 2009 --- The Royal Cultural Center in cooperation with the Talal Abu-
Ghazaleh Business Forum at the Talal Abu-Ghazaleh College of Business held today a workshop entitled
“Global Financial Crisis and its Consequences on the Region” at the Royal Cultural Center.

In his speech, Mr. Abu-Ghazaleh addressed three key points; the financial crisis, the consequences and the
solutions.

In respect of the crisis itself,   Mr. Abu-Ghazaleh described it as “a turning point in the global
financial system and world economy that will last for at least ten years.”

“The financial crisis that hit the illusory or parallel market has now started to impact the real economy, which is the most serious stage,” he said.

However, Abu-Ghazaleh expects that the economy will move from recession to depression in the United States of America and the Western countries with variable degrees; never the less,  the effect on the Arab region will be of a lesser degree. 

As to its causes, Mr. Abu-Ghazaleh attributed the crisis to the financial derivatives which the Bank of International Settlements estimated to be about five hundred trillion dollars.

On the second key point, Mr. Abu-Ghazaleh discussed the consequences of the crisis referring to the forthcoming great geo-economic changes, including the emergence of interlaced giant economic blocs such as BRIC group which includes Brazil, Russia, India and China.

He also pointed out to the reports on the shift of wealth towards the East; “I am expecting changes in the composition of the Group of Seven (G7) to include different memberships and countries such as China and India.”

He added that it is likely that we will see a radical change in the economic policies and eventually in the US politics in particular and the world politics in general.

As for oil, Mr. Abu-Ghazaleh believes that the decline in its prices is temporary; and that it was a result of the shock in capital markets.  He expected oil prices to rise again to more than a hundred dollars per barrel before the end of this year.

Mr. Abu-Ghazaleh emphasized the need to reform the World Order along with all its financial, economic, and monetary and trade institutions, noting that  the USA and the world will tend to place more legislative and regulatory control on the economy, particularly on financial institutions, to ensure greater transparency and accountability, and to shift from the absolute free capital economy to a controlled, monitored and responsible capitalist system.

“I agree with international reports that saw in this shift an opportunity for countries such as Egypt, Iran, Turkey and Venezuela to become influential economic powers and join the group of super powers if they manage to put in order their conditions during this critical transitional phase,” he noted.

On the third key point, Mr. Abu-Ghazaleh addressed the solutions required to tackle the crisis, indicating that “ on top of such solutions should be the development of control systems over financial and lending institutions, financial transparency, financial accountability (or what President Obama referred to as “age of responsibil