Effects of the Current Crisis on the Global Economy

This paper presents some effects of the current international economic and financial crisis on the main macroeconomic variables. For this purpose, are valued the direct and indirect influences, on short and mediumterm, of the crisis on direct investment, on employment, on the non-governmental credit ale valued. Financial crises are an inevitable feature of the capitalist system and follows a predictable course. The increasing of chances of profit in a particular economic sector attract funding sources, creating an explosion of investment. The global upturn from what is considered the worst economic and financial crisis since the 1930s remains fragile, and a premature exit from demand-stimulating macroeconomic policies aimed at fiscal consolidation could stall the recovery. A continuation of the expansionary fiscal stance is necessary to prevent a deflationary spiral and a further worsening of the employment situation. In this context, it is important that the macroeconomic policy framework be strengthened to promote sustainable growth and employment creation. Past experience suggest that a sustainable growth strategy requires a greater reliance on domestic demand than has been the case in many countries over the past 30 years. In such a strategy, job creation for absorbing surplus labour would result from a virtuous circle of high investment in fixed capital leading to faster productivity growth with corresponding wage increases that enable a steady expansion of domestic demand. This may call for a rethinking of the paradigm of export-led development based on keeping labour costs low.