Responding to Responding to Financial and Financial and Economic - - PowerPoint PPT Presentation

Responding to Financial and Economic Downturns

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SESSION

XIV

IFP/CRISIS ILO Crisis Response: Trainer’s Guide InFocus Programme on Crisis Response and Reconstruction

Responding to Financial and Economic Downturns Responding to Financial and Economic Downturns

Responding to Financial and Economic Downturns

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SESSION

XIV

IFP/CRISIS ILO Crisis Response: Trainer’s Guide InFocus Programme on Crisis Response and Reconstruction

Characteristics of FEDs

&Drastic declines in GDP growth &Falls in equity prices and output &Very high inflation rates &Sharp drops in consumption and incomes &Heavy burden of external debt &Very volatile when combined with other

types of crises: social or political, natural disasters

Responding to Financial and Economic Downturns

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SESSION

XIV

IFP/CRISIS ILO Crisis Response: Trainer’s Guide InFocus Programme on Crisis Response and Reconstruction

Factors Which Contribute to FEDs

& Deterioration of financial sector balance sheets & Increases in the interest rates & Increase in uncertainty - lenders less willing to

lend

& Deterioration of non-financial balance sheets

(caused by unexpected change in the inflation rate, or unanticipated exchange rate depreciation)

Responding to Financial and Economic Downturns

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SESSION

XIV

IFP/CRISIS ILO Crisis Response: Trainer’s Guide InFocus Programme on Crisis Response and Reconstruction

Indicators: FEDs

& Fiscal deficit and current account deficit & Rate of inflation & Over-valuation of the exchange rate & Capital flows & Credit growth & Extent of non-performing loans & Bank liquidity & Export decline & Economic slow-down & Liberalisation without adequate regulatory system

Responding to Financial and Economic Downturns

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SESSION

XIV

IFP/CRISIS ILO Crisis Response: Trainer’s Guide InFocus Programme on Crisis Response and Reconstruction

Societal Impacts of FEDs

& Contractions in the economy & Increases in absolute poverty and income

inequality

& Open unemployment - labour force shifts to less

productive and less remunerative activities

& and underemployment & Increased vulnerability of already disadvantaged

groups

& Deterioration in wages & Threats to political stability

Responding to Financial and Economic Downturns

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SESSION

XIV

IFP/CRISIS ILO Crisis Response: Trainer’s Guide InFocus Programme on Crisis Response and Reconstruction

Russian Financial Crisis 1998

& Combination of the devaluation of the ruble,

default on domestic and foreign debts and a collapse of the stock market and major commercial banks

& This crisis accentuated already existing social

protection problems

& Widespread deterioration in welfare compared to

two years earlier

& Total poverty rate increased from 22% of

households to 33% just after the crisis

& Urban households more affected than rural ones

Responding to Financial and Economic Downturns

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SESSION

XIV

IFP/CRISIS ILO Crisis Response: Trainer’s Guide InFocus Programme on Crisis Response and Reconstruction

ILO Response to FEDs

& Expand employment through employment-intensive

infrastructure schemes

& Facilitate re-entry into employment by reorganizing

employment service networks

& Continuous upgrading of worker skills & Furthering labour standards and worker’s rights & Promoting voluntary self-help mechanisms & Identification of self-employment opportunities and

market demand

& Training and retraining programmes