"The Impact Of Global Crisis On Romania’s Economic Development "

Abstract

The world is passing through the most difficult economic and financial crisis in the history, which severely affects its stability in the long term, risking an uncontrolled slide into chaos and uncertainty. The housing market crisis emerged in the United States in July 2007, due to multiple interferences generated by the globalization, has spread to other regions, triggering the world economy into recession. The study is trying to present the main causes and characteristics of the crisis, with special attention to its impact on Romania, which has witnessed a severe economic downturn in the first half of 2009, registering a sharp decline in industrial production, construction sector, exports and also in the lending activity. To deal with high budget deficit and liquidity pressures in the short term a financing agreement with international organizations has been concluded. But, in the long term, the external debt burden is increasing, the sustainable development of Romania facing new risks arising from both the global crisis and the internal vulnerabilities. Introduction The acute adversity of the international financial crisis impact, we believe, lies not in the huge size of the losses it has caused (estimated at over USD 4,000 billion just for the financial system), but in the threat for the credibility of the development capitalist model, based on free market forces. Investor's confidence in the capability of markets to automatically adjust its dysfunctions has drastically fallen and the rise of unemployment and poverty as consequences of the global crisis could severely damage the political and social framework, particularly in the less developed countries. The turbulences on the international financial markets arising from the US housing market crisis emerged in July 2007, have turned drastic in the second half of 2008. Despite expectations of an intervention by the Federal Reserves and / or the U.S. government for its rescue, only one week after the nationalization of Fannie Mae and Freddy Mac, two giants of the financial world, at mid-September 2008 the investment bank Lehman Brothers, a reference name on capital markets, has been left to fall into bankruptcy, which has degenerated into the slump of the stock exchanges capitalization indices, all over the world. The processes of globalization and liberalization of trade and free capital movement have proved to be factors, although we can not say that they have caused, but at least favoured the