“After the Global Financial Crisis… expect more”

“After the Global Financial Crisis… expect more”


DailyMirror – Financial Times

It has been just over than a year since the fall of US Investment Bank Lehman Brothers, which many mark as the beginning of the Global Financial Crisis 2008-09. The crisis saw failure and closures of thousands of businesses worldwide, record unemployment, declines in consumer wealth estimated in the trillions of U.S. dollars, substantial financial commitments incurred by governments, and most notably significant decline in economic activity around the globe. Now many economists, political leaders, bankers and other market commentators are jubilantly declaring the worst is over and everything is ok again. These same analysts who were oblivious to the looming financial debacle are ignoring evidence which corroborate that this marks only the beginning of larger impending global crisis.

Beyond the global recession, the world also needs to brace for more crises in the coming years. MTI Consulting’ CEO Hilmy Cader who recently addressed the Rotary Club of Colombo stated “We are not out of the woods yet-the worst is yet to come! We still need to deal with the impact and aftershocks of the financial meltdown and the long term changes it has brought about. Also the world, particularly the emerging and developing nations should be on guard to face a greater impacting Eco Credit Crisis and Bottom of the Pyramid Crisis”.    

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Financial and Economic Crisis have occurred for centuries starting from the Tulip Bubble in 1637 to Great Depression of 1929 to current Global Financial Crisis. The current financial crisis has been termed by leading economists as the worst since Great Depression. The global economy has been in reverse gear with 2009 growth projected at a measly 0.5%. Economists predicts that the average annual world economic growth rate in the next five years would be lower than the average annual world economic growth rate in the past 15 years. With advanced economies stacking up huge deficits, emerging economies such as China, India have greater responsibilities to make more contribution to world economic growth in future years.

There have been record redundancies worldwide. Unemployment in the US has been at a 26 year high. Overall 18 to 51 Million Jobs could disappear globally by 2009 and possibly 230 Million by 2010. Combined effect of redundancies, pay cuts, and constrained credit has resulted in empty wallets leading to sagging sales worldwide. The downturn in the European and US economies soon started sending shock waves around the world particularly the emerging export driven countries. Central banks around the world cut interest rates while governments rolled out stimulus plans to support the economies. The amount of financial losses in this period is a subject of much debate. One estimate focusing on stimulus plans and monies at risk in debt swaps and shaky derivative products total to $196.7 trillion, which to many is a conservative figure.

Economies and enterprises should be also be cautious of long term changes and implications that maybe brought about by the crisis. Consumer’s tendency to save and avoid large debt will become more popular leading to long term drop in consumption. Government spending will also reduce in the long term which coupled with reduced private consumption will slow down investment.

Hilmy Cader stressed we haven’t seemed to learn anything from past crises. He articulated there are two ways out of the crisis.

Economies could either patch up where government needs to bail out corporations and induce consumer spending.The other long term approach would be to wake up through fundamental market correction and new economic-ecological model. He mentioned the same applies at enterprise level and the worst is yet to come until there are fundamental corrections.

The Eco Credit Crisis

As we recover from the global financial crisis we are faced with the greater imminent danger- the Eco Credit Crisis. The world’s fast growing population is using up resources at an unprecedented level, significant part of which is not being renewed and is causing irreparable damage to the environment. James Leape, director general of WWF recently mentioned the financial recession pales in comparison to the looming ecological credit crunch.

If we continue to live on the Earth Ecological credit, by 2030 we need the equivalent of 2 planet resources to keep up our lifestyle. The Earth Overshoot Day was on 23rd of September this year and by 2050, it will be on the 1st of July, which clearly shows we are using more resources than the Earth can regenerate.

Hilmy Cader stated “It must be kept in mind that unlike the economic recession, governments cannot bail out enterprises from the emerging credit crisis.” With the world’s population expected to shoot to 9 Billion by 2040, it is now up to governments and enterprises around the world to take responsibility-what is being done is certainly not enough!

The Bottom of the Pyramid Crisis

Popularized by C.K. Prahalad, the Bottom of the Pyramid concept which contends that poor people should be seen as potentially profitable customers rather than mere charity cases has caught on fast in the past few years. While some organizations have taken notice and reaped benefits, the bottom of the pyramid has been largely ignored by most. Multinationals and even local companies are yet to be convinced there is a large enough profitable market.

The numbers are clearly against the views of such companies. More than half the world’s population lives on less than US$ 2 a day. There is striking disparity between the rich and the poor with over 76.6% of the private consumptions made by 2 richest deciles of the world’s population.

Hilmy Cader argued “The developing and emerging countries are particularly paying the price through crime, terrorism and health hazards as the bottom of the pyramid is being continuously ignored.”


While various quarters shudder at the thought of the three crises mentioned there also lie limitless opportunities for enterprises, governments and entrepreneurs. The financial crisis maybe associated with closures and companies going bankrupt, but it must be kept in mind that some of the best known companies have thrived while some were born during such times. Thus Hilmy Cader advises “Companies should be tough in anticipation of tough times. They should seize the downturn opportunities gear-up for the upturn.”

Mr. Cader also believes the Eco Credit Crisis and Bottom of the Pyramid Crisis presents Blue Ocean style opportunities for businesses. He encourages companies to find their link of not directly invest in Environment and Poverty.

MTI Consulting is an international strategy consultancy with a global team covering Bahrain, Bangladesh, India, Malaysia, Pakistan, Sri Lanka, and UAE focusing on Strategy Consulting, Corporate Finance, Human Resource Management, Marketing and Research & Analytics.

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Comments (2)

  1. Allen Taylor :

    Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

  2. Andrew A. Sailer :

    This blog helped me explain this subject to my son. Thanks 🙂

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