Showing posts with label emerging markets. Show all posts
Showing posts with label emerging markets. Show all posts
Saturday, April 04, 2009
Will The Global Financial Crisis Halt The Rise Of Emerging Economies?
0 comments Posted by PD at 9:32 AMNOBODY talks about “decoupling” any more. Instead, emerging economies are sinking alongside developed ones. In 2008 emerging stock markets fell by more than those in the rich world, and financial woes forced countries such as Hungary, Latvia and Pakistan to go cap in hand to the IMF. Taiwan’s exports have plunged by 42% over the past year, and South Korea’s by 17%; even China’s have shrunk. Singapore’s GDP fell by an annualised 12.5% in the fourth quarter of 2008, its biggest drop on record. Is this the end of the emerging-market boom?
Over the five years to 2007, emerging economies grew by an annual average of more than 7%. But in the past three months their total output may have fallen slightly, according to JPMorgan, as the fall in exports was exacerbated by a sudden drying up in trade finance. For 2008 as a whole, average growth in emerging economies was still above 6%, but recent private-sector forecasts suggest that this could slip to less than 4% this year. That is grim compared with the recent past, though still robust set against an expected 2% decline in the GDP of the G7 countries.
Over the five years to 2007, emerging economies grew by an annual average of more than 7%. But in the past three months their total output may have fallen slightly, according to JPMorgan, as the fall in exports was exacerbated by a sudden drying up in trade finance. For 2008 as a whole, average growth in emerging economies was still above 6%, but recent private-sector forecasts suggest that this could slip to less than 4% this year. That is grim compared with the recent past, though still robust set against an expected 2% decline in the GDP of the G7 countries.
Short-term pain is only to be expected. But some economists argue that emerging markets’ longer-term prospects have been badly hurt by the global financial crisis. From Brazil to China, they claim, the boom was driven largely by exports to American consumers, easy access to cheap capital and high commodity prices. All three props have now collapsed. In particular, as America’s housing bust causes households to save more, they will import less over the coming years. This could reduce emerging economies’ future growth rates.
Read the full article HERE
Friday, April 03, 2009
Just making a bullet list of all the items that developing countries and poor nations got at the 2009 G20 summit in London.
- India and other developing nations to get a greater say in the international organizations such as IMF and World Bank.
- After 2011, the US could lose its veto power at those institutions and Western countries could find their voting rights severely reduced.
- The convention that an American heads the World Bank and a European heads the IMF will also now be abandoned, the G20 leaders say.
- The G20 also created a new Financial Stability Board, incorporating all members of the G20 for the first time, to replace the current Financial Stability Forum, which mainly consists of the central banks and finance ministries of US and European countries.
Funding Pledges:
- $500bn for the IMF to lend to struggling economies
- $250bn to boost world trade
- $250bn for a new IMF "overdraft facility" countries can draw on
- $100bn that international development banks can lend to poorest countries
- IMF will raise $6bn from selling gold reserves to increase lending for the poorest countries
If IMF have more money to lend then it means that poor countries are less reliant on Western nations when they get into trouble and need aid. Poor countries will also be less reliant on the value of the US dollar because IMF has its own accounting currency, SDR, which is a basket of major currencies such as dollar, euro, yen and pound.
Source: BBC
Subscribe to:
Posts (Atom)
