logo

Global Economic Crisis Assignment

   

Added on  2020-05-11

7 Pages1537 Words52 Views
Running head: ECONOMICS ASSIGNMENT Economics AssignmentName of the StudentName of the UniversityAuthor Note

1ECONOMICS ASSIGNMENT TOC

2ECONOMICS ASSIGNMENT Answer 1: The sovereign credit rating, calculated by three primary rating agencies in the world,namely the Fitch, the Standard and Poor’s and the Moody’s, is the measurement yardstick whichhelps the investors across the world to get an insight about the credibility of a particular countryregarding the investment prospects. It also portrays the risk associated with investments on thatparticular country, including the political and the socio-economic risks (Afonso, Furceri andGomes 2012). The economy of Iceland, being one of the most stable economies, had enjoyed immenseinvestment potential in the investment sector. It has also attracted huge foreign investments dueto its credibility, over the years. Before 2006, as per the sovereign credit ratings of the Moody’s,the country had immense profitability in the investment sector. However, with the GlobalEconomic Crisis starting in the international scenario in the year of 2008, all the majoreconomies of the world were adversely affected and Iceland was no exception (Rose and Spiegel2012). The financial sector of the Iceland being a highly leveraged sector, the households as wellas the banking and the private institutions had the tendency to borrow heavily from the foreignmarkets and this trend exists even at the end of the year 2007, just before the occurrence of theGlobal Economic Crisis. The total external debt of the country was 549% of the GDP of thecountry of which the banks had an outstanding debt of 400% of GDP (Erkens, Hung and Matos2012). In this context with the advent of the Global Economic Crisis in the year 2008,collectively with the high debt statistic of the country, would lead to negative speculations aboutthe credibility of the country regarding the debt prospects of the country. The speculation

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
An Analysis Of Iceland Economics Essay
|5
|1069
|52

(solved) Economic Assignment MBA
|9
|1567
|111

Online Library for Study Material with Solved Assignments - Desklib
|12
|3091
|88

European Sovereign Debt Crisis Report Assignment
|10
|2260
|199

Analysis on the Existential Crisis on EMU
|4
|513
|342

European Financial Crisis: Causes, Impacts, and Mitigation Strategies
|6
|1521
|50