BROWSE ...
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The Current Global Financial Turmoil & Asian Developing Countries
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| Author(s):
Yilmaz Akyüz
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| Economic Sector(s):
(1) Monetary and financial issues and policies |
| ESCAP Reference
No.: - |
| Division/Office:
OES (UNIS/Library/MDG Centre) |
| Published Date:
April 2008 |
| Country:
{Sub-regional Publication} |
| Hard Copy Price:
Online Copy Only
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After six years of exceptional performance, the world economy has entered a period of uncertainty due to a financial turmoil triggered by the subprime mortgage crisis in the United States of America. The resilience of emerging markets to direct and indirect shocks from the crisis will play an important role, since much of global growth in recent years has been due to expansion in these economies, notably in Asia.
This paper posits that current difficulties in the United States economy and vulnerabilities in emerging markets are not unrelated to financial excesses that made a major contribution to global expansion in the past six years, including credit, asset and investment bubbles triggered by rapid expansion of global liquidity. It examines the role that regulatory shortcomings have played in the subprime crisis and provides useful lessons for emerging markets where such shortcomings are often seen.
Furthermore, it discusses key aspects of prevailing economic conditions in major Asian developing economies affecting their vulnerability to financial shocks from the crisis, examining the extent to which they have been successful in managing the surge in capital inflows and preventing the emergence of fragility and imbalances, drawing on the lessons of the 1997 crisis.
The paper summarizes possible trade and financial effects of the crisis on Asian developing economies and discusses policy challenges and options. It emphasizes on the Chinese and Indian economies the fragility and imbalances of which could be laid bare by shocks from the subprime crisis. |
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- Introduction
- The role of finance in recent global expansion
- Expansion and crisis in the United States
- The subprime boom and bust
- The policy response and prospects
- Capital flows and vulnerability in Asia
- Lessons from the 1997 crisis
- Capital flows
- Credit, asset and investment bubbles
- Current account balances, exchange rates and reserves
- Capital account measures
- External shocks and policy options in Asia
- Growth prospects: projections and beyond
- Financial contagion and shocks
- Trade linkages and growth in Asia
- Policy challenges
- Conclusions
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