In turn, the rapidly increasing financial fragility in the financial sector, in the non financial corporate sector and the household sector has led to a sharp decline in private sector consumption and investment spending and thereby induced recession in most of the developed economies and in some transition and developing economies. I would like to elaborate briefly on these issues.
At the global level, the 2000s were characterized by huge macroeconomic imbalances. The USA, the UK, Spain and many countries in Eastern Europe experienced booms in private consumption, mostly fuelled by easy credit, and incurred large current account deficits.