Weekly Economics Analysis by Lloyds TSB

2008 has been a year full of tumultuous events for financial markets, with the failure of some of the brightest names in the banking sector and wholesale government rescues being mounted for most of the
rest.

2008 has been a year full of tumultuous events for financial markets, with the failure of some of the brightest names in the banking sector and wholesale government rescues being mounted for most of the
rest. Low financial market volatility, a feature of the last seven years, turned into one of the highest periods of volatility ever experienced in some markets. The boom in the world economy has come to an abrupt end and now seems a distant memory. But at the start of the
year, there was some optimism that while economic growth would slow, outright recession would be avoided. Now, the world economy faces the worst recession since the 1980s. Inflation was not seen as
a major problem at the start of 2008, but by the end of the year deflation and disinflation were the main concern.

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