Financial Crisis in Kazakhstan
It is a disaster with immense power and sometimes it is compared with a hurricane as it cannot be controlled and avoided. We are still feeling the consequences of global decline in the economy and we ask questions from ourselves “Why did it happen? ” and “What were the causes for this? ”. Financial Crisis made a huge impact on the economic stability of Kazakhstan. Crisis happened because people did not want to accept the bad news as their businesses, salaries, living and working conditions were becoming much better day after day.People had a miraculous hope that luxurious way of living will last forever and there will never be an explosion which happened in 2008. As we faced the crisis we could not adequately analyze the problem and were not willing to do it either.
The problem of financial crisis is peoples’ flippant behavior which created a misbalance between banks and clients and government has to create a new plan to solve this problem. There are several important dates and steps which made Kazakhstan to face this Global Problem. Also, these dates changed not only economy of the country, but peoples’ lives and destinies.We live in the world where everything is connected with other and if something happens everything will fall like house of cards. However, the roots and consequences are to be identified. Banks are trying to cope with this problem, because the biggest hit on this part of the economy. President of Kazakhstan, Nursultan Nazarbaev, gave a new order of the development of financial sector of the Republic of Kazakhstan after the crisis period to make sure that it will never happen again.
Financial Crisis in Kazakhstan Essay Example
Causes of Financial Crisis As it was said before, there are several things which led to a financial crisis.It is not the result of one day and not the fault of just one country. I think it would be fair to say that year by year we were putting ourselves in a situation which made favorable conditions for the crisis to come. We can start with several dates which were showing that Global Financial Crisis is knocking our doors. They are: 7th February 2007 “HSBC announces losses linked to U. S. subprime mortgages.
”(Mauro F. Guille, 1st page). It means that prices for mortgages started to decline and banks could not get their money back.Moreover, banks were making tougher rules to give loans and require full documentation from people about their income. That led to a huge decrease in number of given loans and as a result the customer confidence which was an essential part in the economic circle began to slide down immensely. This is what happened in Kazakhstan, but came much later in 2008. Before this situation, the bubble of bad credit loans were becoming bigger and bigger.
When it finally reached its pick, the explosion affected every industry and every part of the world.We can see the declining trend from the most popular site for Kazakhstan houses sales and rents “Krisha. kz” that the prices beginning from 2008 started to decline. I think it is obvious that the first wave that made the most impact on Kazakhstan was when Lehman Brothers, one of the biggest American Banks announced that they have an enormous loss of $4 billion for the year 2008 on the 11th September. This is when the panic in Kazakhstan started. All banks all over the world are connected with each other. Some analysts say that banks of Kazakhstan had huge debts in the foreign markets which lead to the instability of the banking system.
Also, negative surpluses in trade balances could cause a crisis in our country (“????????????? ?????? ? ??????????”,3rd pgh). However, Nursultan Nazarbaev, President of the Republic of Kazakhstan says that the main cause of crisis in Kazakhstan was speculation. According to his words, “Global Financial Crisis became possible, because of the actions of speculators. They took an enormous amount of money from the stock markets and invested them into commodities markets. ” (“????????????? ?????? ? ??????????”, 2nd pgh). We still cannot say with a 100% certainty that analysts or the President is right. Both of them could be right.
It is just a matter of from what point do you look at the problem. The collapse of Lehman Brothers and shortage of resources made Western Banks to close some of the credit programs which were operating for the developing countries. These means that banks of Kazakhstan did not have any external funding during the times when it was essential for them. Consequently, this led to a financial instability the banking system of Kazakhstan and banks started closing credit programs. So, automobile and house markets felt the most impact. People could not get a loan from the banks to invest in new cars, houses and apartments.Banks were asking their clients to calm down, but the situation was going much worth day after day.
Taking into consideration the fact that most of the purchases were financed by the loans it is not a surprise that positive forecasts of some of the bankers did not come true and the demand for consumer goods started to decline very fast(“????????????? ?????? ? ??????????”, 4th, 5th pgh). Consequences People of Kazakhstan and other countries still feel the consequences of Financial Crisis. We can see it from these major points: The growth of banking system in Kazakhstan decreased. Table #1 (The dynamics of assets of Kazakhstani Banks)