East Asia and Pacific Update, December 2008 : East Asia - Navigating the Perfect Storm

As the global economy finds itself in the worst financial crisis since the great depression, the East Asia and Pacific region has not been spared the full fury of the economic storm. The surge and subsequent drop in food and fuel prices was followe...

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Main Author: World Bank
Format: Serial
Language:English
Published: World Bank, Washington, DC 2020
Subjects:
Online Access:http://documents.worldbank.org/curated/en/593791468244552163/East-Asia-navigating-the-perfect-storm
http://hdl.handle.net/10986/33512
id okr-10986-33512
recordtype oai_dc
spelling okr-10986-335122021-04-23T14:05:20Z East Asia and Pacific Update, December 2008 : East Asia - Navigating the Perfect Storm World Bank ECONOMIC GROWTH ECONOMIC OUTLOOK FINANCIAL CRISIS CAPITAL FLOWS ECONOMIC SHOCK FISCAL TRENDS POVERTY REDUCTION POLICY COORDINATION BANKING As the global economy finds itself in the worst financial crisis since the great depression, the East Asia and Pacific region has not been spared the full fury of the economic storm. The surge and subsequent drop in food and fuel prices was followed by the intensification in the financial crisis that began in mid- 2007 in the U.S., deepened through the first half of 2008, and took a sharp turn for the worse after September 15. Even as East Asian policymakers were battling the previous crisis in late 2007 and early 2008 - the rise in inflation following the steep increases in food and fuel prices they were confronted by sudden falls in equity prices and exchange rates, sharp increases in short-term interest rates, and an abrupt deceleration in export growth. The epicenter of the storm was in the developed countries, but its reach spread quickly across the globe. The failure of important financial institutions in the major financial systems froze interbank and credit markets around the world and revised the price of risk upward, triggering a global liquidity shortage. The ensuing search for liquidity worldwide prompted, among other things, the sale of equity and debt securities and the withdrawal of capital from emerging markets, destabilizing banking systems far from the center of the crisis. Boosts to liquidity and injections of capital in financial institutions by developed country authorities may avert a systemic meltdown of financial markets, but heightened risk aversion and an ongoing deleveraging across the world is causing capital to retreat from developing countries and the cost of financing to rise. The loss of trust, breakdown in financial markets, and curtailment of bank loans have hit investment, production, and trade, causing global growth to slow rapidly. Japan and Europe are already in recession, and the US is expected to follow soon. All three are expected to contract further in 2009, dampening import demand and resulting in the first decline in world trade volumes in a quarter century. 2020-03-31T20:49:03Z 2020-03-31T20:49:03Z 2008-12 Serial http://documents.worldbank.org/curated/en/593791468244552163/East-Asia-navigating-the-perfect-storm http://hdl.handle.net/10986/33512 English East Asia and Pacific Economic Update; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper East Asia and Pacific East Asia Oceania
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ECONOMIC GROWTH
ECONOMIC OUTLOOK
FINANCIAL CRISIS
CAPITAL FLOWS
ECONOMIC SHOCK
FISCAL TRENDS
POVERTY REDUCTION
POLICY COORDINATION
BANKING
spellingShingle ECONOMIC GROWTH
ECONOMIC OUTLOOK
FINANCIAL CRISIS
CAPITAL FLOWS
ECONOMIC SHOCK
FISCAL TRENDS
POVERTY REDUCTION
POLICY COORDINATION
BANKING
World Bank
East Asia and Pacific Update, December 2008 : East Asia - Navigating the Perfect Storm
geographic_facet East Asia and Pacific
East Asia
Oceania
relation East Asia and Pacific Economic Update;
description As the global economy finds itself in the worst financial crisis since the great depression, the East Asia and Pacific region has not been spared the full fury of the economic storm. The surge and subsequent drop in food and fuel prices was followed by the intensification in the financial crisis that began in mid- 2007 in the U.S., deepened through the first half of 2008, and took a sharp turn for the worse after September 15. Even as East Asian policymakers were battling the previous crisis in late 2007 and early 2008 - the rise in inflation following the steep increases in food and fuel prices they were confronted by sudden falls in equity prices and exchange rates, sharp increases in short-term interest rates, and an abrupt deceleration in export growth. The epicenter of the storm was in the developed countries, but its reach spread quickly across the globe. The failure of important financial institutions in the major financial systems froze interbank and credit markets around the world and revised the price of risk upward, triggering a global liquidity shortage. The ensuing search for liquidity worldwide prompted, among other things, the sale of equity and debt securities and the withdrawal of capital from emerging markets, destabilizing banking systems far from the center of the crisis. Boosts to liquidity and injections of capital in financial institutions by developed country authorities may avert a systemic meltdown of financial markets, but heightened risk aversion and an ongoing deleveraging across the world is causing capital to retreat from developing countries and the cost of financing to rise. The loss of trust, breakdown in financial markets, and curtailment of bank loans have hit investment, production, and trade, causing global growth to slow rapidly. Japan and Europe are already in recession, and the US is expected to follow soon. All three are expected to contract further in 2009, dampening import demand and resulting in the first decline in world trade volumes in a quarter century.
format Serial
author World Bank
author_facet World Bank
author_sort World Bank
title East Asia and Pacific Update, December 2008 : East Asia - Navigating the Perfect Storm
title_short East Asia and Pacific Update, December 2008 : East Asia - Navigating the Perfect Storm
title_full East Asia and Pacific Update, December 2008 : East Asia - Navigating the Perfect Storm
title_fullStr East Asia and Pacific Update, December 2008 : East Asia - Navigating the Perfect Storm
title_full_unstemmed East Asia and Pacific Update, December 2008 : East Asia - Navigating the Perfect Storm
title_sort east asia and pacific update, december 2008 : east asia - navigating the perfect storm
publisher World Bank, Washington, DC
publishDate 2020
url http://documents.worldbank.org/curated/en/593791468244552163/East-Asia-navigating-the-perfect-storm
http://hdl.handle.net/10986/33512
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